The new GM posts a profit! Thanks to ideas like the Chevy Volt

Why did GM recently close several of its manufacturing facilities and accept $50 billion from the United States Federal Government? Because it was losing money as quickly as the BP oil leak is polluting the Gulf of Mexico. GM’s solution was to spin off loads of its debt through a bankruptcy agreement and emerge on the other side in the fast lane toward profitability. Many critics believed that it was a mistake for the Federal Government to step in on GM’s behalf but almost in symbolic spite of those naysayers the company just announced a quarterly profit.

A profit to the tune of $865 million, which looks like a sign that some of GM’s changes are making an impact on the bottom line. Before the restructure, North American markets were draining GM’s cash stores as it tried to continue meeting commitments to retirees with good benefits packages. The broader economy also played a role as well as GM’s dogged focus on large, inefficient SUVs.

The new GM has mightily invested in new vehicles like the Chevy Volt which deliver a value proposition that satisfies traditional drivers while also pushing the energy efficiency envelope. A quarterly profit doesn’t mean GM is home free. The company has paid off $6.7 billion in loans to the Federal Government but another $43.3 billion remains invested in it its shares. Essentially the American people own 61% of GM.

That means this trend has to continue on course for a while before the Federal Government can consider its investment fully repaid. Another possibility would be for GM to do an IPO, which would be likely to generate a huge outpouring of cash as investors take on that risk instead of the government.

Beyond profits, GM is also using more of the facilities it owns. 85% of its North American factories are busy making vehicles according to the Associated Press. Hydrogen cars, PHEV cars like the Chevy Volt, solar cars, and other new high efficiency vehicles will take GM to the next plateau of success. But only if it retains its resolve.