Updated with earnings resultsWASHINGTON ( TheStreet) -- Three years ago, General Motors ( GM) was a bloated, bankrupt automaker with models nobody was buying, brands that customers and the company were abandoning and an outlook that was less about building buzz than about planning an early burial. Thanks to a leaner lineup, likable models and a new culture that actually listens to the consumer, the new GMs put that company in the rear view. The company reported earnings today and seems to have turned the corner -- with a first quarter net income of $3.2 billion, or $1.77 per fully-diluted share, and revenue increasing $4.7 billion to $36.2 billion. "We are on plan," said Dan Akerson, GM chairman and CEO, in a statment. "GM has delivered five consecutive profitable quarters, thanks to strong customer demand for our new fuel-efficient vehicles and a competitive cost structure that allows us to leverage our strong brands around the world and focus on driving profitable automotive growth." Last month, GM's total U.S. auto sales jumped 27%, to 232,538 vehicles. Its sales for the year, meanwhile, are up more than 25%, giving GM a firm 20% share of the U.S. market that's well ahead of its next largest competitor, Ford's ( F) 16%, and distancing itself from its toughest foreign foe, Toyota ( TM) -- whose share has slipped from 15% last year to 14% so far this year. Since its $23 billion, $33-a-share IPO in November, General Motors has been the only automaker among the Top 3 to gain market share, as even resurgent Ford's year-to-date portion fell slightly, from 16.7% last year to 16.2% thus far in 2011. Part of that resurgence comes from just giving the customers what they want, such as giving Chevrolet Camaro buyers a base 312-horsepower engine in a $22,000 car, but condensing that power into a conservative 3.6-liter V6 engine that still gets nearly 30 miles per gallon on the highway. "Ever since the IPO, General Motors has had the opportunity to 'right-size' their models," says Brandy Schaffels, senior editor of TrueCar. "By eliminating Pontiac, Hummer and Saturn, they're able to really focus on their core models, and certain models are now able to do better because they're not competing within their own network." The ongoing energy crisis in Japan after the earthquake, tsunami and nuclear events there and the unexpected disruption to Japanese automakers' U.S. output after a spate of tornadoes in the South has offered GM yet another road to recovery. The company said 33% of its April revenue came from government and rental-company fleet sale. That's an extraordinarily high figure akin to what carmakers were using as a crutch during recent recession-based retail slumps, but it's a smart move considering GM's ongoing recovery. "As of right now, Honda ( HMC) doesn't do much fleet, Toyota ( TM) does a little bit and Nissan ( NSANY) does a little more," says Ivan Drury, analyst for Edmunds.com. "From GM's standpoint, if those companies pull back, we may as well fill that gap because otherwise it'll be Chrysler or Ford taking those spots." It's hard for GM to take blame for accepting whatever business it can get, especially when it's trying to sell vehicles to a buyer base that already has a big stake in its comeback. The U.S. government and, by extension, its taxpayers invested $50.7 billion into GM's bailout, or nearly 80% of what was spent to bail out bankrupt U.S. automakers in 2008 and 2009. GM is still on the hook for more than $27 billion of that and, even in its fleet sales, has been trying to woo customers with more of what they wanted in the first place. Drury says GM has leveraged Chevy Malibu and Impala sales -- which have increased 11.5% and 29.8% this year, respectively -- out of its fleet agreements in an attempt to let consumers check out the two-tone interiors, soft-touch fabric and dual-cockpit seating. Even the Cadillac CTS isn't being allowed onto rental lots without being loaded with such features as navigation systems and OnStar safety and concierge service. "You've gone from a situation where, historically, the inside of cars were not the vehicle's strength to getting inside these vehicles and finding they're really nice places to be," says David Sargent, J.D. Power and Associates' vice president of global vehicle research. "When you watch consumers in the showroom, they immediately jump in the driver's seat, turn knobs, press buttons and feel the material, and the advances that domestics have made on the interior has really helped them in the showrooms." With help from auto industry analysts, TheStreet has identified the five GM models that have not only helped GM accelerate out of its slump, but have driven its post-IPO search for an identity straight into earnings season:
It was going to be difficult for GM to make a car worse than the model that the Cruze replaced -- the spare, utilitarian, economy-sized Cobalt -- but it would be similarly tough to think of a better replacement. Packed with 10 standard airbags, stability control, antilock brakes, plush seating, free OnStar for the first six months, free XM satellite radio for the first three, keyless entry and available Bluetooth, the Cruze presented offerings on par with competitors such as the Toyota Corolla and Ford Focus while forever burying the no-frills Cobalt, whose interior panels clunked when drivers hit a pothole. "When you look back at some of the GM vehicles from five years ago, especially in the smaller segment, they just felt cheaper, frankly," J.D. Power's Sargent says. "They've done a good job of making vehicles feel more expensive and of higher quality without spending a whole lot of money on them." That investment paid off, as the Chevy Cruze has sold more than 75,000 units so far this year, making the less-than year-old vehicle Chevrolet's best-selling car and the second-best-selling GM model behind the Chevy Silverado pickup truck. By comparison, only 51,000 Cobalts were sold by this time last year. More importantly, however, the Cruze has enough power behind it to get ahead of rising gas prices. Chevy credited the compact's 26 miles per gallon city and 36 highway for increasing sales as average gas prices approached $4 a gallon. Car buyers who paid the extra $2,000 for the Cruze's "eco" package -- it starts at $18,000 -- got a slightly better deal at the pump, as that model's fuel economy jumps to a hybridlike 26 miles per gallon city and 42 highway at a time U.S. drivers need it most. "Vehicles like the Cruze are necessary in general because people are becoming more aware of the environment, wanting to become more fuel-efficient and wanting to reduce their dependency on petroleum fuels," TrueCar's Schaffels says. "Not everybody wants to go to a hybrid or electric car, but Chevrolet has the advantage of being able to offer the Volt and the high-mileage gasoline engine -- that's also a well-featured vehicle that people don't get into and feel like they're in a penalty box."
For roughly six years, GM's Buick brand took one of its most recognizable marques and threw it onto the scrapheap in favor of a newer, more costly Lacrosse. Consumers have been spending the entire year since the Regal's relaunch telling GM how bad a move that was. In the Regal's first year in the lineup, its sales have already eclipsed those of the midsized Lucerne and are eating into sales of its Lacrosse replacement, whose numbers are down 5.1% this year. That's just fine by Buick, which cites Regal as one of the biggest reasons Buick sales are up 51% from last April and 35% year over year. More importantly, GM credits the Regal for bringing 40% of Buick's new customers over from non-Buick brands. "For Regal and the Buick brand, that's been huge," says Edmunds' Drury. "It's really helped carve their image." That image is quickly shifting from Great American Retirementmobile to all-around luxury competitor. It was a different game when the Regal and its ilk looked at Ford's boatish Lincolns and Chrysler's luxury liners as the primary competition a generation ago, but with Toyota and Lexus' luxury share looking vulnerable and other high-end imports pricing themselves above some consumers' heads, a $26,000 base-model Regal with stability control; dual-zone climate control; a seven-speaker entertainment system with XM Radio, Bluetooth and USB connections; heated power seats; and 30 miles to the gallon on the highway starts to look like a sweet deal. Perhaps that's why GM stacks the Regal and its power features and OnStar package against such competitors as the Audi A4, Acura TSX and Volkswagen CC and, in more than a few instances, comes up with more bang for the buck. It's a brand with bigger aspirations than being the shiniest toy in the luxury bargain bin. "GM now able to pick out models that they want to make the flagship models," TrueCar's Schaffels says. "The Regal is one of the first cars in the Buick line where GM is seriously aiming at the luxury import competition."
Just as GM was heading into its bailout, it was getting ready to unleash a Cadillac that would not only quash the lingering stigma of grandpa's Cadillac, but make Cadillac accessible to just about anyone willing to pay the $35,000 base price. Cadillac cast a wide net with the CTS -- offering it in a sedan, coupe, station wagon and performance vehicle -- and was rewarded with the biggest catch of its fleet. Last month the CTS passed Cadillac's SRX sport utility vehicle as the brand's top-selling model, with sales increasing 29% from the same time last year and the model's 18,519 year-to-date sales representing a 62% increase from the same period last year. That growth is the biggest reason Cadillac's total volume has increased 31% since early 2011, but it's what's inside the CTS that's driving demand. Even the base model has Bose 5.1 sound, stability control and OnStar navigation, but the $38,000 upgrade includes leather seating, wood trim, LCD backup cameras, 10-way power seats, a six-disc CD changer and Bluetooth connection in the console, a heated steering wheel and universal remote. "Since the IPO and even a little before that, GM was placing greater emphasis on trying to get the right fit and finish and work with some nicer materials," TrueCar's Schaffels says. "The CTS, which I think is a gorgeous car, is one of the first ones where you can say General Motors has really done this right." The $62,000-plus V performance models have made this line a little more intriguing, however. Forget the 10-speaker Bose sound system with hard drive, the microfiber performance seats, the metal pedals, the keyless access and standard OnStar. The 556-horsepower V8 engine may be the longest middle finger American luxury automakers can extend to their European counterparts. The features make it luxurious, but that kind of acceleration makes it just plain hot. "As a woman, I think it's a very sexy car," Schaffels says. "It doesn't matter if you get into this car with baby spit-up on your shirt: You get into this car and you just feel pretty."
Creating a car on the same platform for different brands not only forced GM to compete against itself and pave its way to bankruptcy in the years before the IPO, but also exposed one of its key weaknesses. The company's not only turned it into a strength with its GMC Terrain and Chevrolet Equinox; it's done such a good job that it's hard for the consumer to tell it's the same car. "Even though they are sister vehicles, if you looked at them back-to-back you wouldn't know," Edmunds' Drury says. While the body types are strangely disparate, their skeletons reveal efficient twins whose sales have increased by a combined 49% since April of last year. Each starts at roughly $24,000, each is remarkably spacious for a small SUV and each features a sliding middle-row seat that gives passengers in the back more legroom while giving passengers in the front better access to children in car seats. They're also incredibly tough to track down, as Drury says GM offers few incentives for the vehicles and dealers tend to keep them around for only two weeks or less. "Both of those vehicles were among the fastest-selling vehicles that GM had last year," Drury says. "They were selling in the low teens in terms of days to turn over for almost all of 2010 and their incentives beyond customer loyalty cash-back were near nothing compared to anything else GM sold." More importantly, however, the Terrain and Equinox distanced themselves from competitors such as the Honda CR-V and Ford Escape Hybrid not only with fuel economy, but with improved interior fabric and color palates similar to those originally offered in the Chevy Malibu and, later, in the Cruze.
It's an uphill climb for a $40,000 plug-in hybrid that has neither the widespread infrastructure to support it nor the consumer will to splurge on one, but the 25- to 50-mile range of the all-electric engine is making that climb slowly but surely. Compared with the current standard-bearer of alternative energy vehicles -- the Toyota Prius hybrid -- the Volt is getting its electric-powered clock cleaned. Toyota sold 12,477 Priuses in April alone and has sold more than 55,000 year-to-date -- a 32% increase from the same period last year. The Volt, meanwhile, rolled just 493 units off of dealer lots in February and notched a scant 1,700 in sales so far this year. That said, the Volt's doing a much better job than its all-electric plug-in competitor the Nissan Leaf. While costing roughly $10,000 less than the Volt, the Leaf's managed little more than 1,000 sales year-to-date. It's not a stunning victory by the Volt by any means, but with U.S. gas prices still climbing it's a nice head start. Considering that the Volt's technology is helping to increase the mileage of GM gas guzzlers such as the Camaro and Cadillac CTS -- which will get a 310-horsepower, 30 miles per gallon V6 next year -- the Volt's small win against its direct competitor may be buffered by the big assist it's giving its brand. "GM is estimating 20,000 Volt sales for the first year, but there are so many factors going against it," Edmunds' Drury says. "More than 50% of every hybrid sold is a Prius, but you're still looking at less than 2,000 Volts running around on the road, so I think sales may not be the best way to measure what's going on with that car." -- Written by Jason Notte in Boston. >To contact the writer of this article, click here: Jason Notte. >To follow the writer on Twitter, go to http://twitter.com/notteham. >To submit a news tip, send an email to: email@example.com.