GM sales up everywhere but here - Top Stocks Blog - MSN Money
 
Search Top Stocks:

GM sales up everywhere but here

Posted Apr 16 2008, 02:22 PM by Anthony Mirhaydari
Rating:
Filed under:

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 have owned cars and trucks made by both American based companies and foreign based companies. Some have been economy cars, some regular cars, and some luxury cars, along with 4 trucks based vehicles. Overall, I have had a better experience with the American vehicles than the others. I have had two American cars with around 200,000 miles before selling them that had few glitches. I cannot say that abut the foreign cars. I have been trying to buy cars and trucks built by American based companies for two reasons: 1) to support US jobs, and 2) to keep the profits here in the US.

Please realize that the profits made by foreign manufacturers that build cars here go back to the country of the foreign parent. They are never taxed here. What that is is a hidden method of imbalanced trade.

American vehicles have improved greatly over the last few years - take a good look at the Chevrolet Malibu, Cobalt and HHR. If you want luxury, take a good look at the new line from Cadillac - particularly the CTS series.

Please buy Ameican - or you or your children will be working for much lower wages for a foreign firm.

RE: GM Sales Up Everywhere But Here:

GM did themselves in the late 1970's  when they cheapened their vehicles and  blurred the distinctiveness of each brand; the Oldsmobile had a Chevy engine, the Caddy had an Oldsmobile engine. I know...I owned a 1978 Cadillac Seville, then the most expensive personal Cadillac made. (other than the 75 limousine) It had an Oldsmobile engine, not the Caddy V-8 I expected.

People began to question why they were paying so much for vehicles with mismatched engines.  GM downsigned their cars further in in 1985 and 1986 and the descent of their market share continued . Plastic bumpers, plastic chrome, plastic wood inside, mismatched door panels, pooir styling, it all adds up.  Not to mention the terrible reputation for reliability.  Add in the prior public relations nightmare(s) of the Oldsmobile diesel engine debacle, the Cadillac V4-6-8,  not to mention the infamous Chevy Vega, Cadillac Cimmaron, UGLY Pontiac Aztec, and all of that plastic cladding on other recent models, and even a casual observer can understand why GM is in trouble.

I owned Cadillacs and Buicks for years, and I admit it is tempting to look at the DTS and Lucerne, but I defected to European and Japanese luxury cars after both poor performance, and terrible dealer service.  Now Buick is actually benchmarking the Lexus RX 350 with its new Enclave.

I have to give GM credit for one thing, they are finally getting the message about the styling of their cars; (20 years too late, unfortunately) and the looks alone of the new models are improving significantly.  But even the most beautiful of all cars must be dependable and economical.  I hope that dependability is improving for GM's sake.

There must be aspirational or "halo cars" like the Cadillac Eldorado and Seville,  Buick Riviera and GSX, Grand Prix and GTO, Monte Carlo and Malibu SS396, and Olds 442 and  Toronado, not cars like the watered down Park Avenue that was simply a gussied up Buick LeSabre and the Buick Rendevous, basically a shortened GM minivan chassis (shared with the ugly Pontiac Aztec)  made into an SUV to fill a marketing gap for Buick.  Show us some convertibles, besides the Saturn SKY and the Pontiac Solstice, and please show us some true 5 and 6 passenger convertibles.  Show me some data from Consumer Reports recommending many different types of GM's line-up in all divisions.  Skow me some real wood panels, nice chrome, matched body panels.  Reasonable resale.  That will bring me back to a GM showroom.  And not until then.

Chevonly you are an F-ing moron! HONDA is the best auto maker on the planet and thats a fact! What kind of retard would take a honda to a chevy dealer when it broke down any way? Go get another chevy and marry it since you love em so much- dang your stupid! Any car you PUSH will have problems! But hey i love HONDAS and im glad completely retarded idoits like you dont drive them so please move to canada and kill yourself!

Al  the vehicales that I've every own were American.  My 1989 mercury courage had 121 thousand miles on it before I hit a telephone pole with it.  It hung the road when on the freeway and no body makes seats that comfortable any longer. Had a 99 saturn SL2 that is one of the most dependable america cards made. Currently own my spouse owns a 04 Chev Silverado and I own a 05 Dodge Durango. Really enjoy the ride of the veh but is not crazy about it's reliablity. 28,000 transmition went out. the dealer I purchased veh from didn't want to fix it.  Veh was still under factory warrant.  Had to go to a different dealer to have it with w/o a problem.  I'm buying another Saturn.  The veh are looking better and they are dependable.

I have owned many Japanese and Korean cars. The best I've owned were Cadillacs, save one lonely Geo Storm that was marvelous. Went thru 2 motors and 2 trannies in a Celica GT. My 92 Buick work car has 253,000 on it. Original motor and trans, only a fuel pump and alternator. No Japanese car has ever been that good to me. I would not hesitate to buy American again, especially the new Malibu.

Honda is better than GM! You guys should get some common sense and get an import, or just keep cryin when your american car breaks down-    

                                                                                                        ME,

The only reason American cars are as good as they are is because of Toyota,Honda,Nissan,etc. Many years ago the big 3 realized they needed to improve quality because of the imports. I was a rural mailcarrier and I drove Dodge Spirits that were very reliable. But guess where they were made? Mexico!! Now I drive a 2001 S-10 and my wife drives a 2004 Cavalier. The Cav get's 36mpg thanks to the 2.2 Ecotec engine. A great engine. America makes good cars. But don't kid yourself,they were forced into it.

When I think of buying an American car, i don't think of the Big Three. I think of Toyota or Subaru. These automakers have a good portion of their vehicle built in America. The Big Three keep shutting down production plants, continue to produce poor quality vehicles which get poor gas milage. and the cars and trucks look just plain ugly. The Big Three no longer show American engineering that they once showed. If these auto manufacturers want to win the mind of Americans then they need to play some serious catchup with the japanese.

Mike Wallace states that the Japanese auto makers are laughing all the way to the bank.  He only left out what bank - the National Bank of Tokyo.  At least when the American auto makers go to the bank, it is inside the boundaries of the United States of America.  Sure they have money in other banks, but the slim profits go inside the United States.  You won't see Honda, Toyota, Nissan depositing their profits in the United States.  

Replying to Ed, it is not just about supporting American jobs. Yeah sure the transplants have their plants in the US, but ALL of the profits go abroad. It is the same philosophy that American companies have used for their expansion over the years. So yes, buy an American product, no matter where it is made and you will support the American economy.  If you ever had a family member hired by GM (before the 1980's), look at the burden that the General is taking up from the American government by providing health care for life. Looks like I will have a fe yrs less to work to support Papi :-)

Send a Comment

Comments must be directly related to the blog entry. Comments with offensive language will be deleted. Your e-mail address won't be displayed.

(please, no HTML tags. Web addresses will be hyperlinked):