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GM executives see profitability in 2010, maybe

/ Source: The Associated Press

A lot of things have to fall into place, but if all goes according to plan, top executives of General Motors Corp. are hoping the automaker will start making money again in 2010, Vice Chairman Bob Lutz said Thursday.

Lutz, however, would not make a firm prediction on a return to profitability.

"At this point the future is so cloudy in terms of the development of the market, when it's going to pick up again," he said while speaking to reporters at an event in Joliet to showing off the company's 2009 model lineup.

In the past 18 months, GM has lost $57.5 billion, including $15.5 billion in the second quarter. The company has closed factories, laid off workers, revamped its product lineup and performed strongly overseas, but it has been hit by U.S. economic woes and high gas prices that have curtailed pickup truck and sport utility vehicle sales. The company has not predicted when it would return to making money.

But if GM can continue to pare structural costs, and if sales volumes pick up, Lutz said, the company's fortunes could change and its model lines, including small cars, could start making money.

"Then I see a very good opportunity that basically I would hope that everything could be break-even to profitable," he said.

Chairman and CEO Rick Wagoner and Chief Operating Officer Fritz Henderson have said that if everything goes according to plan and auto sales recover in 2010 "we would hope to have the corporation profitable again by then," Lutz said.

Currently, Lutz said, the company is losing money on all of its model lines, but small-car profitability in the U.S. is within reach as they become more popular because of high gasoline prices.

Prices for smaller vehicles already are headed higher because people who are downsizing still want the same luxury and safety features they get on larger vehicles, he said.

"We are selling every HHR and Cobalt we can make with either minimal or zero incentives, whereas three years ago, even the HHR, you had to put 3,000 bucks on it to move it, so I think in practice the price of small cars has gone up three or four thousand dollars," Lutz said.

A small car will never match the profit the company could make on an SUV, but small car profits will rise in the U.S. like they have in Europe, where gasoline is far more expensive, he said.

Lutz also predicted that most vehicles in the U.S. will be powered by four-cylinder engines in five to 10 years, and he said sales of all-wheel-drive vehicles likely will drop because of fuel efficiency concerns and government fuel economy requirements.