General Motors (GM, Financial) is one of the major manufacturers of vehicles, however the firm has seen some tough times recently. The company started anew after declaring bankruptcy in 2009. Although GM removed a number of its weaknesses, some of them could not be eliminated and they are still keeping the company from rising again. One of the weaknesses of the company was its organizational structure. Due to the hierarchical structure, there were so many unnecessary levels within the organization, and therefore, there was so much red tape and lack of communication. GM was forced to conduct layoffs in order to rectify such weaknesses and it seems intent on joining the ranks of the most dynamic automakers in the world. However, the question whether GM is back on track, is still to be answered.
The major operations of GM include: designing, manufacturing, and marketing of cars, crossovers, trucks, and automobile parts all over the globe. Some of the major brands managed by the company are: Buick, Cadillac, Chevrolet, GMC, Opel, Daewoo, Holden, and Vauxhall along with Alpheon, Jiefang, Baojun and Wuling. In order to enhance its primary business i.e. manufacturing and selling of vehicles, the company operates a secondary business regarding automotive financing services and lease products via its subsidiary, General Motors Financial Company.
GM’s Financial Performance
Since the company restarted its operations after bankruptcy, there has been significant year-on-year rise in the revenue. For the financial period ended December 30, 2011, GM’s revenue was $150 billion, while for the comparative period i.e. the period ended Dec. 30, 2010 it was $135 billion. It can be said that the revenue of the company has shown a commendable increase. The net income of the company has followed a similar trend. For the latest financial period, the net income was $9 billion, while for the comparative period i.e the period ended Dec. 30, 2010, it was $6 billion.
The efficiency of the operations of the company can be evidenced from its return on assets ratio and return on equity ratio. GM’s return on assets ratio is 2.9%, while its return on equity ratio is 13.26%. Although the return on assets ratio may be considered as low, the return on equity ratio is commendable.
New Pickup Trucks by GM Raise Anticipation
The new lineup of pickup trucks by GM has given rise to the anticipation that the company is ready to take back the throne. GM is all set to release improved versions of GMC Sierra and Chevrolet Silverado full-size pickup trucks. These new trucks will give GM an edge over its direct competitor Ford (F, Financial). These trucks by GM will directly compete with Ford’s F-150 trucks. Ford’s trucks are currently the top-selling vehicles in the United States, however, it is being anticipated that their market position will be disrupted by GM’s new trucks.
Mark Reuss, GM North American President, said, “There's nothing more core to our business than our trucks.” He further said, “Our competitors may think that they have smooth sailing ahead, but let me tell you the weather is about to change.” The statements by the company’s officials indicate high optimism regarding its prospective performance in the market; however, the actual results can only be known when the trucks are launched.
It has been observed that GM’S big trucks and related SUVs generate profits of $12,000 or more per vehicle and they are directly responsible for about 60 percent of the total global profit of the company. It has also been stated by the analysts at Citi that the new trucks may add more than $1 billion as additional operating earnings in 2013 and 2014.
According to the statements by the company’s officials, the new trucks feature an improved interior design. The interior design has received a significant degree of attention and it has moved a notable step forward. It has been stated that the improved design will play a vital role in helping the company regain its top market position, specifically at the top end.
Since the management at GM has brought radical changes in its structure and there is high anticipation regarding the prospective profit of the company based on the new trucks, in my opinion investors should buy the stock of the company.
The major operations of GM include: designing, manufacturing, and marketing of cars, crossovers, trucks, and automobile parts all over the globe. Some of the major brands managed by the company are: Buick, Cadillac, Chevrolet, GMC, Opel, Daewoo, Holden, and Vauxhall along with Alpheon, Jiefang, Baojun and Wuling. In order to enhance its primary business i.e. manufacturing and selling of vehicles, the company operates a secondary business regarding automotive financing services and lease products via its subsidiary, General Motors Financial Company.
GM’s Financial Performance
Since the company restarted its operations after bankruptcy, there has been significant year-on-year rise in the revenue. For the financial period ended December 30, 2011, GM’s revenue was $150 billion, while for the comparative period i.e. the period ended Dec. 30, 2010 it was $135 billion. It can be said that the revenue of the company has shown a commendable increase. The net income of the company has followed a similar trend. For the latest financial period, the net income was $9 billion, while for the comparative period i.e the period ended Dec. 30, 2010, it was $6 billion.
The efficiency of the operations of the company can be evidenced from its return on assets ratio and return on equity ratio. GM’s return on assets ratio is 2.9%, while its return on equity ratio is 13.26%. Although the return on assets ratio may be considered as low, the return on equity ratio is commendable.
New Pickup Trucks by GM Raise Anticipation
The new lineup of pickup trucks by GM has given rise to the anticipation that the company is ready to take back the throne. GM is all set to release improved versions of GMC Sierra and Chevrolet Silverado full-size pickup trucks. These new trucks will give GM an edge over its direct competitor Ford (F, Financial). These trucks by GM will directly compete with Ford’s F-150 trucks. Ford’s trucks are currently the top-selling vehicles in the United States, however, it is being anticipated that their market position will be disrupted by GM’s new trucks.
Mark Reuss, GM North American President, said, “There's nothing more core to our business than our trucks.” He further said, “Our competitors may think that they have smooth sailing ahead, but let me tell you the weather is about to change.” The statements by the company’s officials indicate high optimism regarding its prospective performance in the market; however, the actual results can only be known when the trucks are launched.
It has been observed that GM’S big trucks and related SUVs generate profits of $12,000 or more per vehicle and they are directly responsible for about 60 percent of the total global profit of the company. It has also been stated by the analysts at Citi that the new trucks may add more than $1 billion as additional operating earnings in 2013 and 2014.
According to the statements by the company’s officials, the new trucks feature an improved interior design. The interior design has received a significant degree of attention and it has moved a notable step forward. It has been stated that the improved design will play a vital role in helping the company regain its top market position, specifically at the top end.
Since the management at GM has brought radical changes in its structure and there is high anticipation regarding the prospective profit of the company based on the new trucks, in my opinion investors should buy the stock of the company.
