General Motors (GM, Financial) reported good financial numbers for the third quarter 2014. The results were primarily driven by robust worldwide sales. Also, growing margin in North America helped the company to put up a great show for the quarter. Moreover, its customer friendly strategies continue to deliver positive results for the company that should fuel its growth and assist the company in compensating for the losses of safety recalls. Its recall expenses increased about $1.5 billion.
Solid plans
GM plans to launch key vehicles in the fourth quarter that includes newly introduced GMC Canyon and Chevrolet Colorado mid-sized pickups in the United States. It is also planning to launch the Cadillac ATS-L, Buick Envision and Chevrolet Cruze in China, followed by Opel Corsa and ADAM ROCKS in Europe. This should certainly drive its sales in the upcoming fiscal year 2015. Moreover, the automaker should also benefit from the 4G LTE high-speed mobile broadband in approximately 33 vehicles this year, which was above the average industry rolled over.
This will undoubtedly capture more sales for General Motors at home as well as in the global market during the fourth quarter. In addition, the company is planning to bring in the market over a dozen extra models by the end of fourth quarter that should possibly fuel growth for its top line going forward. General Motors is experiencing significant progress in its truck market. Its truck market during the third quarter grew 24.3%. The truck and SUVs continues to gain market share for the company in the global market.
Positive trends
Additionally, the company is witnessing positive market traction in South America. During the third quarter, the company managed to attain the break-even point in the region. GM Financial is effectively executing its growth strategies in South America in order to support its sales for growing vehicles. GM Financial witnessed noteworthy improvement in its financial activities that increased about 13% to 20% as compared to a year ago quarter.
It is also working with its co-associates like Ally Financial European and Latin American businesses more aggressively that should certainly help the company to move its vehicles quickly and enhance its sales in the region. Its North American market looks great as it is delivering strong performance in its core operating matrix such as EBIT. Its EBIT margins in the North America improved by 9.5% to $2.5 billion from $2.2 billion last year in the same quarter.
However, the company is seeing softness in its European market as the automotive industry is facing challenges in the region. General Motors had a loss of $400 million in the European market. Nevertheless, GM is focusing on the new HD pick-ups and SUVs that should help the company gain market share in the region. Its new products such as Mokka are capturing a great deal in the European market. It is also realizing a gradual recovery for Opel/Vauxhall brand that should enhance its performance in the region and complement to top line growth in the fourth quarter.
Furthermore, the company is dramatically improving its safety programs through better design, execution, and system integration that should undeniably drive its growth in the coming years. General Motors is also benefiting from the repair of cars. It is seeing corresponding decline in the demand for the rental car that should accelerate its sales going forward. It is additionally expanding its Lansing Delta Township, Mich., assembly plant. This expansion of $37 million in Lansing is expected to generate tax benefit of $4 million for the next 12 years.
Conclusion
General Motors looks like a great deal as the company is launching more than a dozen vehicles during the fourth quarter and executing various strategic initiatives in order to move vehicles quickly in the market. It is also seeing strong sales in its global market that should certainly help the company compensating its losses from recalls.
