Sure the Fed raised interest rates for the seventh time in 12 months to cool what Chairman Allen Greenspan thinks is an over-heated economy heading toward inflation.
Still, nothing can put a damper on the heady feeling the U.S. Big Three automakers experience as they report extraordinary results for 1994.
Rising interest rates aren't good for the auto industry, of course, because they make already expensive cars even more so. Slower sales in the early going this year already are forcing automakers to post selective incentives to reduce what have become, in some instances, too many cars for too few buyers.
Experts inside and outside the industry are re-adjusting their 1995 sales forecasts downward slightly. So far no one sees a calamity building; '95, as viewed after two months into the new year, still shapes up as a strong year - perhaps even better than 1994, which produced 15.3 million car and trucks sales (big rigs included) and a bonanza for the Big Three.
Records shatter like wineglasses hurled at the fireplace as the U.S. Big Three automakers report their fourth-quarter and full-year 1994 financial results (see Vital Signs, p. 24).
As a group,Corp., Motor Co. and Corp. generate an awesome $335.6 billion in revenues and $13.7 billion in profits. They ended 1994 with cash and marketable securities approaching $32 billion combined - a stash they'll need to finance future models and downturns - even after paying down pension liabilities. GM alone reduced its unfunded pension account by $7.7 billion to $12.6 billion at year's end, and Chrysler's pensions are now fully funded for the first time since the Plymouth Fury was a popular model.
At year-end the Big Three's worldwide employment stood at an estimated 1,155,000. On a global basis they sold some 17,429,103 cars and trucks in 1994.
Even though each recorded slightly lower market-share figures for 1994, cumulatively they snatched 64% of the U.S. car market and 81% on the truck side including Canada in's case). Based on total vehicle sales their share came in at 72.8%.
Here are 1994 highlights for each automaker:
GM: Earnings records were set in both the fourth quarter and full year, thanks largely to a turnaround in North American Operations (NAO) after five years of operating in the red. With NAO generating $492 million in the final three months, GM netted $1,572,100,000 on $42,553,300,000 sales in the period. That was up from $1,176,400,000 net income on $37,267,700,000 revenues a year earlier.
For the full year, NAO earned $690 million vs. an $872 million loss in 1993 as GM's overall net income climbed to a record $4.9 billion on $154,951,200,000 revenues.
International Operations (IO) also played a starring role by generating $1,582,000,000 in profits for the full year, up from $1,115,000,000 in 1993. But during the final quarter, NAO out-earned IO by $118 million as overseas netted $374 million, up from $266 million in 1993.
GM's three large subsidiaries also made major profit contributions in 1994, although GM Acceptance Corp.'s earnings dropped slightly to $920 million from $981 million in 1993. GM Hughes Electronics Corp. earned $1 billion, up from $922 million, and Electronic Data Systems Corp. earned $822 million vs. $724 million.
GM wound up 1994 with $11 billion in cash and marketable securities, up $500 million from year-end 1993 and $1.7 billion above Sept. 30, 1994, despite big outlays to pay down unfunded pensions during the year.
President John E (Jack) Smith Jr. cites strong results in Europe and Latin America as major contributors to GM's rebounding fortunes, but reminds that GM must average a 5% return on revenues during cyclical ups and downs to maintain necessary financial strength. In 1994, GM's profit margin was 3.5%, up sharply from 2% in 1993.
CHRYSLER: "It was a terrific year for Chrysler any way you look at it," exclaims Chairman Robert J., and indeed that says it all. If there were a Heisman Trophy for automakers, the No. 3 automaker would be the easy winner. Some of its 1994 achievements:
* Best quarterly earnings ever in the final three months: $1,168,000,000, some $212 million higher than the "old" three-month record set during 1994's second period and a huge gain from $777 million in fourth-quarter 1993.
* Highest yearly profits ever at $3.7 billion, easily beating the $2.4 billion earned a decade earlier, which was nearly matched in 1993.
* Best quarterly revenues in history during the final three months - $14.3 billion, $1.1 billion above the prior record set in the first quarter of 1994 and $2.3 billion ahead of 1993's final quarter.
* Annual revenues reaching $52.2 billion, easily beating the previous yearly record of $43.6 billion set in 1993.
* Cash and securities totaled some $8,371,000,000 at year's end, considerably more than the $7.5 billion Mr.has targeted as a necessary kitty for future products and down-cycles. That was up from $5.1 billion a year earlier.
FORD: Strong results from North American automotive operations paced the No. 2 automaker to record 1994 profits totaling $5,308,000,000, although barely edging out the prior yearly record of $5.3 billion set in 1988.
Even so, the 1994 results more than doubled 1993's $2,529,00,000 profits. U.S. automotive operations contributed $3 billion to the cause, double the prior year's $1.5 billion, and international automotive operations snapped back into the black with $784 million in earnings vs. a $542 million loss in 1993.
Worldwide revenues soared to a record $128.4 billion during the year compared with $108.5 billion in 1993, while fourth-quarter revenues hit $33.6 billion, up from $27.8 billion a year earlier. Profits in the final three months reached a record $1,569,000,000, more than twice the $719 million posted the prior year.
Like GM,is targeting a 5% return on sales to keep product programs on track and to maintain a nest egg for leaner times. During 1994 the No. 2 automaker's profit margin on automotive sales was 3.6% vs. 1.1% in 1993.
Ford also boosted its treasury substantially in 1994, ending the year with $12.1 billion in cash and marketable securities compared with $9,752,000,000 on Dec. 31, 1993.
Ford's financial services group earned $1.5 billion, after a $440-million write-off on the sale of First Nationwide Bank, compared with $1.6 billion in 1993. Ford Motor Credit Co. bested perennial leader GMAC by earning a record $1.3 billion for the year, up from $1.2 billion in 1993.
Looking ahead, Chairman Alexander J. Trotman says Ford 2000 - the company's global reorganization - "... will result in more product at lower costs in the years to come."