Media Misses Key Source of GM Woes

Sure, General Motors(GM) , loaned $50 billion by the government, made a few improvements. But when its numbers lifted last year, politicians crowed and the media declared the company back in the groove.

The problem is: GM was, in large part, merely taking advantage of the near disappearance of Toyota(TM) and Honda(HMC) from the landscape after the Japanese earthquake and tsunami in March 2011.

Remarkably, when GM reported its second-quarter earnings yesterday, much of the media -- including The Wall Street Journal -- was silent on the topic. They ascribed GM's weakness solely to financial woes in Europe. Granted, Europe's slide into financial oblivion is an enormous problem, but it's one amplified by Toyota and Honda's rise from the near dead.

In a story on GM's quarter, though, The Journal did not mention Toyota or Honda or the fact that it took a year, but the Japanese automakers are back in a meaningful and apparently sustainable way (see Reuters' story Toyota's earnings and upped sales targets).

Instead, The Journal went all out blaming Europe with the headline: "Europe's Woes Hamper GM."

And this lead: "General Motors Co. posted a 38% decline in quarterly profit as a result of losses in Europe and South America, and a decline in North America, where the auto maker's market share slipped."

It neglected to mention the reason for that market share slip: Toyota and Honda are grabbing it back, hand over fist.

Though buried at the bottom of the article, Investor's Business Daily at least touched upon this central factor: "U.S. automakers' slower growth came while Asian and European makers' sales rebounded as Japan continued to recover from the devastating March 2011 earthquake and tsunami."

Look: GM is an improved company. But a large portion of last year's strength was a fluke. That is essential to understanding their current and ongoing predicament.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.