Boston, MA, 03/30/2013 – General Motors Company (NYSE:GM) (Current: $27.82, down by 0.86%) has risen from its 2009 bankruptcy state and reorganized itself. It is now considering how it can boost resale values of its vehicles. The company says that it can hike its profit margins and reduce the gap between competitions. Whenever a company has higher residual values it is able to offer lower monthly lease payments. This is due to the fact that the cost depends on the estimated cost of a vehicle at the point of resale and its depreciation value is taken in to account. All these factors come into the picture when the contract ends.
The profitability secret
Chuck Stevens CFO of GM motors for North America said that in order to make lease payments competitive, it spends between $150 million-$200 more on an annual basis. This is the only way that it can keep the resale values below that of its competitors. Stevens also said that the company is focusing on incentive discipline, excellent products and pricing that will outrun that of its competitors. According to him the equation is a very simple one and will lead the company to profitability. Dan Akerson is pushing the company to have more competitive operating margins to have the upper hand in a market that has rival companies such as Ford Motor Company (NYSE:F) (Current: $13.15, Down by 0.53%) and Volkswagen AG (PINK:VLKA) ( Current: $37.79, Down by 0.33%).
Resurrecting the company
Post its bankruptcy, General Motors Company (NYSE:GM) had been unable launch any new car models and is planning to launch 20 new vehicles in America this year. Last year the company’s U.S market share had fallen to a shocking 88-year low. The only way to judge if a particular vehicle has been successful is to see what its residual values are. The four important parameters on which a car is judged are- how well the car was received, whether the car was of a good quality, whether it was desirable and whether people really wished to buy it.