New looks for auto companies

DETROIT – General Motors Co.’s treasurer and vice president of finance is feeling pretty bullish about his company’s future.

After it suffered near death just three years ago, James Davlin stood before more than a hundred industry analysts Sunday evening speaking highly of the company’s expected return to an investment grade bond rating after bottoming out with its 2009 Chapter 11 bankruptcy.

“We think it’s a great time not only for the industry, but also for GM,” Davlin said.

He was speaking at the 25th annual Society of Automotive Analysts Automotive Outlook Conference and dinner at Detroit’s Cobo Center. It was the eve of a media and industry preview for the North American International Auto Show which opens to the public this Saturday.

Visitors to the annual Detroit show will see 500 cars and trucks spread over 18 carpeted acres.

Davlin said he expects his company to return to investment grade from its current satisfactory BB+ rating sometime this year.

None of Detroit’s big 3 automakers is rated as investment grade above the BB+ rating.

“Given the financial strength of the company, we are trending towards investment grade. We have made great progress,” Davlin said.

He attributed the company’s financial improvement to a whole new style of operations.

“When you look at how different the company is now versus pre-bankruptcy – we have had 11 straight (post-bankruptcy) profitable quarters,” Davlin said. “We feel very good about the company’s financial strength.”

During the bankruptcy and bailout by federal funds, GM downsized significantly and changed its strategy that previously had included higher incentives than the company now offers.

“We are not going to compromise. We are not going to buy our way into market share,” Davlin said.

Bob Schultz, managing director at Standard & Poor’s rating agency described all three of Detroit’s Big 3 automakers as stable, but still with a significant financial risk profile. But he pointed out that all three, including GM, are improving financially, and there have been no U.S. auto sector defaults since mid-2009. For GM, profits and cash flow in North America coupled by a weak European market and losses there are issues S&P is monitoring.

But company and analyst predictions for a profitable 2013, expected to surpass 15 million American new auto sales and more than 82 million globally, could be all that is needed to boost the automaker back to investment grade.

Visitors to the show will get their chance to see dozens of vehicles, including the Lordstown-built Chevy Cruze, GM is hoping will keep its future profits growing.

At least 800,000 car enthusiasts are expected to visit the Detroit auto show during its 10-day public run that begins Saturday.

Amid the shiny models and thumping mood music will be what is expected to be the show’s biggest draw: the first new Chevrolet Corvette in nine years.

Technology lovers also can see an experimental concept from electric carmaker Tesla and a diesel version of the Jeep Grand Cherokee. Young buyers can check out a small SUV concept from Honda. Big spenders – and big dreamers – can take a gander at the new Bentley convertible.