DETROIT -- Asked last month whether General Motors cleared a psychological hurdle recently when its stock rose above the $33 price of its initial public offering, GM North America President Mark Reuss laughed and said, "Yes."
Then he quickly changed the subject.
"There's nothing like product and launching with high-quality product, so that's what we're going to do," he told reporters.
That's the sort of eye-on-the-ball mentality that investors likely will want to hear from management at GM's annual shareholder meeting here on Thursday, June 6.
After languishing below $33 long after its November 2010 IPO, GM's closely scrutinized share price has been on a roll since late 2012, thanks to stronger profits in North America and slowing losses in Europe. It closed at $33.89 on Friday.
The U.S. Treasury's ongoing selloff of GM shares has helped, too. The stock price leaped in December, when the government said that it would unload its entire stake by the end of the first quarter of 2014, on a more-or-less fixed schedule. The government still owns 241.7 million shares, or about 18 percent.
Now many analysts say GM is at a pivotal point in its turnaround. It has the opportunity to push its profits and stock price even higher but also faces tough tests over the next year or two. And as the government's exit nears, pressure is on management to demonstrate GM's progress to taxpayers, whose final bill for the federal bailout will be calculated next year.
"The next 18 months will set the tone for the rest of the decade," Morgan Stanley analyst Adam Jonas wrote last week in a note to clients.
David Whiston, an automotive analyst at mutual fund rating firm Morningstar, says taxpayers can forget about recovering the total cost of the government's $49.5 billion bailout from 2009. So far the Treasury has recovered about $30.4 billion from previous stock sales and GM's 2010 repayment of a $6.7 billion loan. It would need to sell its remaining shares at an average of about $79 to break even.
But he says the U.S. government's orderly selloff -- and a likely eventual sale by the Canadian government, which still owns 140 million shares -- should remove a deterrent for investors.
Analysts point to two key factors that should drive GM's profits higher if the company executes its plan successfully:
1. Vehicle launches
In North America, GM will replace more than 90 percent of its lineup with new or significantly overhauled vehicles by 2016. Higher margins and prices from those vehicles should translate into as much as $2 billion in additional profit annually in 2014 through 2016, RBC Capital Markets analyst Joseph Spak estimates.
In 2012, GM North America had pretax profit of $6.95 billion.
That should help GM boost overall profit margins in North America. GM's pretax profit margin in the first quarter was 6.2 percent, compared with 11 percent for Ford Motor Co. GM executives have talked openly about their quest to match Ford's profitability.
"On the strength of the new product, we see GM meaningfully closing the North American [profit] margin gap with Ford over the next three years," Spak wrote last month.
GM executives say the company is on track to break even by "mid-decade," even if the economy doesn't improve. It says a rejuvenated Opel product lineup -- including 23 new or redesigned vehicles by 2016 -- along with cost cuts, will help reverse its chronic losses, which have totaled about $18 billion since 2000.
GM's $175 million first-quarter loss at its Opel European unit was 60 percent smaller than a year earlier. Many analysts now say they are more confident that GM can hit its breakeven goal.