GM: On the Road to Recovery?

By Daren Fonda

Is GM finally turning a corner? Fueled by deep discounts, sales for the troubled automaker surged 47% in June. But that prompted Chrysler and Ford to offer generous incentives too, setting the stage for a brutal price war. GM is also banking on redesigned SUVs to lift sales, despite a shift in consumer sentiment away from the gas guzzlers. High profit margins on SUVs are critical to GM's bottom line. But just 34% of shoppers are now considering an SUV, a three-year low, according to a recent survey by Kelley Blue Book. Sales of fuel-saving hybrids, meanwhile, are expected to zoom from less than 1% of the market to 3.5% by 2012. Honda and Toyota sell the most hybrids, but GM plans to muscle in with hybrid versions of full-size SUVs like the Chevy Tahoe in 2007. With oil prices at record highs, GM dealers can hardly wait. --Daren Fonda