The Auto Writer

Just months after being pushed through corporate bankruptcy and while still in the midst of an incomplete and painful restructuring, GM CEO Ed Whitacre has made a startling pronouncement: GM expects to make a profit in 2010.

Meeting with reporters yesterday in Detroit, Whitacre acknowledged that the company has several obstacles to overcome, but he believes that the current GM management team is up to the task, thus his bold promise of profitability. Whitacre’s statement follows an earlier promise that GM would repay $6.5 billion in government loans by this summer.

The federal government and the governments of Canada and Ontario also have a financial stake in the automaker, monies which may be recouped once GM issues stock again. Current GM stock is worthless, but the automaker has promised to issue new stock once the company returns to profitability.

But it is those obstacles which could keep GM from making its desired profit. Indeed, GM is far from being assured of its future despite taxpayer help. Sales were down by 30 percent last year and customers are looking elsewhere including Hyundai.

The following are some of the obstacles that need to be moved out of the way, preferably beginning this quarter:

• Dead wood – Saturn and Pontiac are expected to close down within weeks, freeing GM from two of four brands which are being swept away. Sichuan Tengzhong Heavy Industrial Machinery Co. of China is expected to close on Hummer this quarter, while GM remains adamant that Saab will be shut down if Spyker or some other bidder doesn’t come through within days.

• Opel and Vauxhall – Opel and its clone brand, Vauxhall, represent the vast majority of GM Europe. GM reversed course in November, deciding to keep its German based brand. But Opel needs money and lots of it, something GM cannot offer to it. Remember the name Klauz Franz as this guy is Opel’s labor chief, an influential man who may be able to help GM secure $4.5 billion in loans from the German government. With a steep price to pay too.

• Brand repair – Of the four remaining GM brands in the US—Chevrolet, GMC, Buick, and Cadillac—only Chevy is healthy enough right now. Pontiac may be gone, but that brand was one of the legs in the three-legged Buick-Pontiac-GMC dealership stool. The upcoming Buick Regal will woo some Pontiac buyers, but that brand doesn’t have enough models to attract and retain customers. GMC will still appeal to people who might otherwise consider Chevy Trucks, while Cadillac needs to expand the CTS success story across its product line.

• Customer perception – GM may finally be understanding that a lot of customers are still mad at it and for a number of very good reasons. Hefty government bail out. Poor quality models. Abandoned brands. Management inefficiency. Winning back what has been lost is critical to gaining market share. An increased market share based on a formula of selling better contented and more desirable vehicles (Chevrolet Cruze) is essential. Forget the Volt, the Chevy Cruze is GM’s make or break model for 2010.

There are enough other factors beyond GM’s control which could scuttle its recovery, but I won’t touch on those.

Is Whitacre blowing smoke? Perhaps. But with the NAIAS set to start next week, the proof will be in the new product introductions which are expected to include an all new Cadillac model.