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General Motors: Is It Good for a Long Drive?

March 30, 2014 | About:
mitu77

mitu77

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Automobile segment in the recent past have been witnessing a slowdown. Despite this slowdown, bigger companies are General Motors (GM) is making all the strategic moves to increase its footprint in the global Automobile market. The global economic crisis has been the key to the downfall of the automobile market. Other than U.S, European market was considered to be a huge market for automobile, but the crisis in the European countries further slowed the growth of automobile market.

From the investors perspective General Motors has cruised along nicely last year, with shares increasing by almost 35% and event surged around 45% growth in its price. Despite the market condition GM still seem to have ample fuel in its tank for a long drive.

Quarterly and annual financial reports

The company recently declared its Fourth Quarter results, although it did miss the consensus estimates but the results seem to be fair considering the automobile market. It recorded a revenue of $40.5 billion as against $39.3 billion year ago quarter. Net income was flat with $0.9 billion same as year ago quarter, while most interesting is the EPS which was $0.57 a growth by $0.03 year ago quarter.

On a year to year basis GM recorded growth in revenue. Fiscal 2013 recoded a total revenue of $155.4 billion as against $152.3 billion in fiscal 2012. Net income declined from $4.9 billion in 2012 to $3.8 billion in fiscal 2013. Subsequently, EPS also declined from $2.92 to $2.38.

Internationally, GM was not abale to impress as it recorded a decline of 6.8% in revenue to record $5.3 billion.

Financial crisis in euro zone continues to affected the performance of GM in European region. GM Europe witnessed a decline of 4.25% in revenues that recoded $14.8 billion in first 9 months of 2013

Journey ahead

The policy of the company for developing or redesigning its vehicles based on the geographical location will always help GM to boost its sales and also pose competition to its rivals.

GM continues to perform well in China. It is also looking forward to expand in developing countries likes India, Brazil and China to meet the rising demand. GM has been focused on the lower segment passenger cars for Indian market and this market is anticipated to grow at a CAGR of 11% from 2012-2016.

The most striking element of General Motors is that it is continually working to improve its competitive position. To further improve its sales in the Asian region, it is modifying the Commodore sedan with new features, and Chevrolet is introducing the Spin cross. To compete in the Middle East, it plans to redesign its SUV series in the next fiscal year

In china, GM also successfully commissioned Cadillac assembly unit in the city of Shanghai and anticipate increasing its production by three folds by end of 2015. It also aims the luxury car segment and to acquire 10% market share by 2020.

Competitor

The company is faces a fierce competition by another Asian auto giant Toyota Motors (TM). Toyota currently ranks as largest manufacturer of automobile and is closely followed by GM. We have noticed that decline of sale in Toyota motors while GM has been recording growth. Toyota is also diversifying its automobile portfolio into electric vehicle which can help the company to record growth in future. Electric vehicle certainly has a very bright future since the price of oil is rising and this factor creates a huge demand for electric vehicle in future.

The company recorded sales of approximately 5.517 unit sales in first 9 months and with its earnings release expected within 2 days (31-Mar-2014), we may expect some growth.

Conclusion

General Motors has done well this year and also recorded growth in revenue from previous year. It is looking to cut losses in Europe, and the future looks bright with several new models are also expected to hit the market. The company’s refreshed Cadillac CTS sedan and the Buick Regal in expect a good sale. New models, such as the Impala and the Silverado crew cab, have also arrived in showrooms. Also, demand for pickups is strong driven by a robust construction market. In totality, General Motors is moving nicely, and should continue driving smooth.


Rating: 4.0/5 (1 vote)

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Comments

Marvinclit
Marvinclit - 2 months ago
Hello!

Administrators, please tell me how to add a video from youtube to a post?



Thanks!
pravchaw
Pravchaw premium member - 2 months ago

Good article. GM seems to be at the mid-point of this business cycle and seem to be enjoying great operating leverage. As Europe improves - any improvement should start to have disproprtionate impact to the bottom line.

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