Auto sales in the U.S. seem to be on a surge as they grew by 6.1% in October, clocking in at 1.28 million units. This is indeed the highest growth in the last 10 years, and it surely is good news for auto retailers. General Motors (GM, Financial) is an auto retailer that reported a decent quarter despite a lot of hardships witnessed during the quarter. Its numbers were ahead of Street's estimates, enabling its shares to rise.
The details therein
Revenue for the quarter stood at $39.3 billion, slightly higher than last year. However, it did manage to meet the analysts' expectations. An increase in product prices, lower discounts and increased sales of pickup trucks drove the top line higher.
The car maker sold 884,000 vehicles in North America as against 808,000 vehicles in the prior year. Demand for General Motors' vehicles surged not only in the U.S., but also in China, resulting in higher sales. Also, the launch of new vehicles attracted more customers to its stores.
Going by the brands, GMC's category, which includes pickups and other utility vehicles, was one of the bright spots. Sales in this category surged 28% over the prior year as people bought more SUVs and pickup trucks. Also, Chevrolet brand registered a growth of 1% as demand for its Cruze sedan moved north.
Adjusted Earnings were also a penny higher, clocking in at $0.97 per share. This was also higher than the estimate of $0.95 per share. Boosting the bottom line was indeed a difficult task since large number of recalls of vehicles resulted in huge costs for the company. Nonetheless, the car maker managed to register growth in earnings.
Some hindrances
General Motors has recalled a total of 30 million vehicles to now. The reason for the recalls made was some ignition switch problems which resulted in deaths of people. Thus, the company incurred huge expenses related to this, which was affecting the profitability.
Also, it faces stiff competition from Ford (F, Financial), one of the leading players in the auto industry. Moreover, it plans to revamp its F-150 pickup truck, as demand for pickups has been on the rise. However, Ford reported a decline of 1.7% in deliveries for the month of October.
The future
General Motors is witnessing higher sales and should continue to do so due to a number of new introductions to its fleet of vehicles. The car maker launched vehicles such as GMC Canyon, Chevy Colorado pickup trucks and many more during the current quarter. These new launches should attract more customers. In addition, the launch of Cadillac ATS-L, Buick Envision, Chevy Cruze, ADAM ROCKS and Opel Corsa, are resonating well with the customers. Furthermore, General Motors introduced 4G-LTE in 33 of its vehicles and plans to add it to another 12 vehicles by the year end.
Conclusion
Thus, the car maker has its strategies placed correctly. Its new introductions and cost cutting efforts have started bearing fruits. Also, its bright outlook makes investors hopeful about the company. It is also performing better than its peers in the industry. Overall, General Motors looks like a promising pick.
