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GM sales up everywhere but here

Posted Apr 16 2008, 02:22 PM by Anthony Mirhaydari
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In a rare release of good news, General Motors announced that its Latin America, Africa, and Middle East operating region set an all-time sales record for the first quarter: Over 323,000 vehicles sold, up nearly 53,000 units from the same period last year.

The 20% increase easily beats the industry’s 12% growth rate for the region and brings the company’s market share to 18%. Even if U.S. consumers aren’t crazy about Detroit’s small cars, and have ended their love affair with super-sized SUVs, the rest of the world is rollin’ American style.

Breaking down the results, all-time sales records were set in Argentina, Egypt, and North Africa. New quarterly records were posted in Brazil, Chile, Ecuador, Venezuela, the Middle East, and Israel. GM’s Chevrolet-branded small cars led the results -- generating nearly 40% of total sales.

Things are a bit different in the Middle East, where tastes are more in line with the United States circa 2003: According to Terry Johnsson, president of GM’s Middle East Operations, U.S.-produced full-sized SUVs remain "very popular in the region." Cheap gas and burgeoning oil wealth make the big vehicles an affordable status symbol in the deserts surrounding the Persian Gulf. [readmore]

Meanwhile, the average American continues to battle the so-called "quadruple whammy" of falling home prices, falling real wages, tighter credit, and rising food and fuel prices. Lehman Brothers analyst Brian Johnson quantifies the impact these factors are having on sales of full-sized trucks and SUVs in a research note published Monday. After peaking in 2003 and 2004, sales have "come under significantly increased pressure over the past few months." With gas prices flying towards the $3.40 per gallon mark, he’s looking for total sales to fall 13% this year to 2,510,000 units. Things are looking equally nasty in the used-car market: As everyone tries to unload their gas-guzzlers, resale values on SUVs and pickups are falling by double-digits.

In response to these trends, Brian expects "manufacturers to cut sharply their output of these highly profitable vehicles, putting pressure on their own earnings." He estimates that GM will need to cut production of full-sized trucks and SUVs by 11% or 143,000 units this year to better match demand. Inventories of these products remain persistently high for GM, with nearly a 120 day supply sitting on asphalt lots around the country.

Compensating for some of this are increased efforts to expand production overseas and buildup small-car capacity here in the United States with an eye towards the export market. Over just the past two days, General Motors announced it’s looking at increasing its assembly capacity in Indonesia and decided to build an advanced $200 million engine plant in Brazil. The latter features a closed-loop production process that doesn’t create industrial waste and will feature a large natural habitat preserve.

The mix shift from profitable trucks to tight-margined small cars will hurt GM: Brian is looking for a $4.7 billion loss in the North American market this year, compared to a $1.6 billion profit in the Latin America, Africa, and Middle East operating region. He thinks a small profit of 46 cents per share could be eked out in 2009. But even with international success, GM will remain on borrowed time unless it can recapture the hearts and minds of American drivers. The hell-bent rush into the electric-hybrid segment is a step in the right direction. And if all else fails, Clinton’s down for a bailout.

(Disclosure: I don't own any shares of the companies mentioned in this post.)

Comments

 

I am a dealer and I agree that the big three have been sleeping until recently.  I drive GM, but even as a dealer would never buy new.  This is where you folks are taking the bath.  I sell 2 and 3 year old Cadillacs that have depreciated, some 30k or more!  There were a couple of GM vehicles recently that were so bad all of them should have been rounded up and crushed.  They were so troublesome I quit selling them, even though they sold great.  (98+S10 Blazer and S Truck, 99 and newer N body, Grand Am, Malibu, Cutlass).  I have more customers who have switched to import just from owning the previous models.    Gm's problem is that they dont nip problems in the bud.  They build a new model, it has a defective part in the first year, so they keep building the same defective parts for the life of the model.   No wonder customers are jumping ship.  Another problem with the General is to damn many models, why the hell does Buick have a MINIVAN!!!.  GM if you are listening.... in what century am I going to be able to buy the new Camaro (even though I dont buy new)  I hear it is now the spring of 09,  well that will be great gas will be $10/gallon by then, good luck with that.  This car has been in the pipeline for years now.  Chrysler can build a car from concept to production in a year.  GM Also has too many engines, it cost them millions for no reason.   Take the full sized trucks, you can get a 4.3, 4.8, 5.3, 6.0, 6.6. Drop that stupid 4.8 it is a wannabe that actually uses more gas than the larger 5.3.  Throw the 4.2 inline six in the trucks instead of the 4.3 V6, The inlines have more torque and were better on fuel.  Oh speaking of 4.2 I6, why the hell do the S/T series come with an I5 or and I6?  Just put the I6 in all of them, save some money. ***GM if you want me to be your new CEO I am sure I could upright the ship, call me.  BTW I drive a Cadillac CTSV, (which is a great car, BUT I love the foot pedal emergency brake, really handy in a manual car, couldnt you have given a hand E-brake out of say a trailblazer?)  Just trying to help you here GM.....

It is sad that old perceptions persist in this area. So much of the public forgives the shortcomings of imports and hesitantly gives credit to the domestic brands. MINI Coopers are notorious for bad transmissions. Toyota has skirted many recalls. So many they have been investigated and criticized by those in the know. Many of the imports require the use of super unleaded fuels. Many still require timing belts being replaced at 60 k miles. Range Rover products have terrible resale values. MBenz has fallen in quality consistently over the years. etc. As far as assembly points, it where the profits end up. I vote for Keeping them in the US.

GM has dug it's own grave - the sooner it passes into history, the better the US consumer will be.... GM's disrespect of US car buyers continues;, consider

it's rapidly growing outsourcing opf US jobs abroad, building successive years of cars with known manufacturers defects, refusing to recall or correct or otherwise make good on these known manufacturers defects by repeatedly stiffing the car buying public. (A google search of gm car issues will provide much unpleasant reading to the casual and uninformed)  There is no such thing anymore as an American made car.  It's a sad statement when one must have a government mandated percentage of domestic parts included in a vehicle to be considered 'domestic'.

I find it amusing to read over the comments made about imports built in America. One guy got it right, the parts are shipped here and then assembled and yes it has created some jobs, but no where near  a one for one for the jobs lost in this country. As for the profits of the company, they all go back to the country of origin and the capital investment in R&D stay in those countries too, not America.  Plus how many dollar of foreign profit goes into supporting our schools, highways, bridges and defense??? Zero, nada, none!!  Did the Big 3 made a mistake or two in the past 100 years??  Sure, but what about all the problems with Toyota lately??  Everyone owes it to themselves to take some time and check out the quality and value of the products being made by GM over the past 3-4 years.  Its' quite impressive and the resale value are better than ever.  Maybe that explains why one of the top dogs at Nissan just jumped shipped to join GM.  Sort of makes you wonder what really going on. Maybe one day the American media will see the light and shift their negative bias away from GM and focus on the what really happening.

When everything sold in America is made elsewhere, where will Americans get the money to buy all these things made elsewhere? Buy American, while there is still time, and do it right down to purchases as small as a package of toothpicks!

As an industry insider I love used American cars!  They're cheap to buy at wholesale auctions & am able to sell them thousands below what used Honda, Toyata, & BMW vehicles go for (while making better margins than the previous makes).  Unfortunately this is exactly the problem with American vehicles:  Quality & resale value.  The big three need to focus on build quality & manage their inventory levels much better.  Stop the focus on market share (offering huge discounts to move metal) and start to focus on building cars (yes cars not trucks & suv's) that American consumers are willing to pay top dollar for.  Tom

I work for General Motors and very proud to say it! You can say that buying foreign cars are putting jobs in american but have you ever thought that the foreign maker is sending your dollar back home? Now that the american dollar has lost value those foreign companies will be losing $$$$ like the rest of us. Don't think they will be sticking around to see what happens next. The american companies know they have a responsibility to the workers and consumers... Do you real think Toyota gives a crap? NO!!!!!

Whats the big deal about a few lost jobs.! america was sold out by

the insiders the last 8 years. The worthless scumbag in office could care less and

GM is at about the same level.

GM shoots itself in the foot paying their new hire workers the new competitive wage rate.  $15.00 dollars an hour won't  buy that new $25,000 Malibou

I just had to step in and defend my American cars - a 2002 Chevy Tahoe and a 2003 Cadillac CTS.  Both cars have been fabulous!  They have been very reliable and I love that they have some styling which seems to be missing on most Japanese cars.  I admit I did own a 1988 Acrua Integra and had no problems but I don't see how it was any better or worse than my American vehicles.  I am definitely a GM buyer for life.  I am holding my breath for the new Chevy Camaro....

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