This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

GM: We Prepared for High Oil Prices

Stocks in this article: F GM

DETROIT ( TheStreet) -- While GM (GM) isn't happy about the soaring cost of oil, it is pleased to have four new compact cars to sell to fuel-conscious buyers.

"I will tell you that we were concerned about this (fuel price increases) well before it was on the front page of any paper in the U.S. or around the world," said CEO Dan Akerson during the automaker's earnings conference call on Thursday. "We've been contingency planning going back to before the IPO on what we would do, how we would react.

Chevy Cruze
The Chevrolet Cruze.

"Fundamentally, we're automotive manufacturers, so the market's going to be what the market's going to be," Akerson said. " But look at it systematically -- energy's going to be more expensive and we've got to prepare for that, and it's come a little bit earlier than the world economy anticipated. So we're going to have to react."

Akerson said GM North America is well-positioned, already geared up to expand its fuel-efficient vehicle lines in 2011. The Chevrolet Cruze, recently introduced, is selling well. The Sonic will come to market this summer: "We hope and expect it will have the same sort of acceptance as the Cruze has," Akerson said.

The Buick Verano, built on the Cruze platform, comes to market in the fall. And the Volt is shaping perceptions, although production levels are relatively low, at least for the moment.

"By the end of this year we'll have four really good entries in to the compact segment with high mileage models," Akerson said. " They are the right products, fortunately, by good planning, happenstance, I don't know, but they are good products at the right time."

Nicholas Colas, strategist for ConvergEx Group, said automakers still can't produce the profits on small cars that they produce on bigger vehicles. "The fundamentals of the business haven't changed entirely," Colas said in an interview. "They still make more money on a big truck or SUV. So when gas prices go up, industry profits go down. There's no way around it."

While it is true that U.S. manufacturers have focused on making compact cars with premium features, Colas said there is a limit. "The price point is important in small cars," he said. "When a small car has $3,000 worth of equipment that diminishes the appeal."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs