NEIL CAVUTO, HOST: The world's largest automaker sees its profits drop 38 percent in the latest quarter. General Motors (GM) is blaming higher healthcare costs the results managed to beat the Street. But, it's been a rough ride for shareholders. The stock is down 32 percent in the last 12 months.
Speaking of which, I asked John Devine, General Motors (search) chief financial officer how big of a deal it will be when President Bush rides in one of GM's spanking new automobiles on inauguration day.
JOHN DEVINE, CFO, GENERAL MOTORS: It's a big deal. Obviously, we've had a long history of Cadillacs being driven by the presidents, so this is an extension of that, but this shows our new DeVille, at least the rough idea of the styling. So we think it is a big deal for us and something we're very proud of.
CAVUTO: I'm noticing a complete design shift. I mean, when the models come out later this year, I mean, is this going to be the basic grill look and design?
DEVINE: It's hint of our new DeVille styling. Some more to come, stay tuned.
But what it gives you an idea is really the renaissance we've had around the Cadillac brand, not just one product. It's the entire lineup. So Cadillacs have become exciting and powerful as well as luxurious.
And I think when you look at Cadillac, it's really standing out for us as the front end of really changing the product lineup and our image of a series of brands that we have behind that.
CAVUTO: Let's talk to the issue at hand, and that is your earnings are better than expected, but I was a little surprised on it not benefiting more from the weaker dollar. What happened there?
DEVINE: Well, I think that really gets reflected, we think, over time. Most of that weaker dollar plays out here in the U.S., and it plays out in a -- in a pricing environment that increasingly is being driven by the Japanese companies.
I think the German companies have already taken a lot of appreciation on their products, and they hedge for a while, so that hedge eventually will wear off. And it probably shows up in a year or two. But it does make them a lot more competitive.
The Japanese, of course, were trying to keep their currency weak up until about a year ago. It's had some appreciation. Probably not enough. But with hedges in place, that probably shows up in the marketplace over a year, maybe two years.
CAVUTO: But do you think your goal is, as many in Fortune 500 America have been telling me, to see the dollar continue to weaken and that that will give you a chance against the Japanese, against the Germans? What do you say?
DEVINE: Our goal is not a weaker dollar, per se. Our deal, our focus is to be competitive on the product side, on the currency side. And frankly, our complaint on currency has not been against the Europeans. It's been the Japanese manipulation to keep their currency weak.
CAVUTO: Of course, we're coming at a day and age when a lot of companies are looking not only at their health care but their related retirement costs are getting excessive. U.S. Airways is essentially, on its retirement side, almost abandoned some of those benefits and shifted them to the government.
Are you in any near jeopardy of doing that?
DEVINE: No. I mean, that's not our plan. People have accused us of going through bankruptcy to shed health care costs and pensions.
I can't speak for the airlines. But I think it's not a model for the automotive business. It's a lousy idea. Really, it doesn't help the country. It doesn't help the companies long-term.
CAVUTO: What's the lousy idea? What's the lousy idea? Going bankrupt?
DEVINE: Yes. The idea of going bankrupt.
CAVUTO: To run away from those responsibilities. OK.
DEVINE: Absolutely. I think you have to face them head-up. And that's what we have to do.
CAVUTO: All right. John Devine of General Motors.
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