Want to see GM’s stock price recover to something closer to the IPO price or – gasp – closer to the price at which Treasury would actually break even on its bailout of GM? Perhaps the answer is addition by subtraction. Maybe it’s time for GM to cash in its chips in Europe and put Opel, Vauxhall, and Chevrolet (the Europe version) out of their misery and sell them. And if nobody wants to buy them (a very strong possibility), GM should wind down the businesses.
For the past decade or two, folks in North America – particularly in the US and Canada – have watched all automobile manufacturing plant after plant being shuttered, particularly among plants operated by Chrysler, Ford, and GM. Now, it’s finally Europeans’ turn to witness what had been a very rare event occurring a bit closer to their homes.
GM has an enormous problem in Europe. Namely, GM Europe is losing money, has been losing money, and will continue to lose money for years. Over the past three years since GM emerged from bankruptcy, GM Europe has lost $3.8 billion (with-a-b) USD. With Europe teetering on the edge of recession (if not already in one), a shrinking auto market, overcapacity, and government austerity, it’s a perfect storm of bad news for GM.
By Chris Haak
The December 2010 US auto sales are in the books, and it was a pretty solid month overall, unless you work for Toyota. Overall, industry light-vehicle sales were up 11.1 percent on the month, and coincidentally, 11.1 percent on the year. Forget all of the talk over the past 12 months about SAAR (seasonally adjusted selling rate); with a full year now under our belts, we know exactly how many cars and trucks were sold. The answer? During 2010, dealers recorded 11,590,274 new-vehicle sales, compared to 10,431,510 new-vehicle sales during all of 2009.
As with any marathon like a year of car sales represents, there were some winners and losers, although there were certainly more winners in 2010 than there were in 2009. Last year, you may recall, only Hyundai and Subaru posted year-over-year sales gains. For 2010, the tables were turned, and all but Toyota and Suzuki lost share, although Suzuki’s loss was far more severe than Toyota’s was. Toyota’s 2010 sales declined by 0.4 percent, and Suzuki’s slid by 38.0 percent.
By Charles Krome
With November sales now in the books, it’s becoming clearer and clearer that the industry is back on the upswing, and that was reinforced during a recent American Press Association (APA) event in Detroit. There, the team from IHS—one of the more prestigious of the automotive consulting companies—presented its forecast for 2011 and beyond to key members of the automotive elite (oddly, they let me in, too).
The IHS is predicting the auto market will finish at approximately 11.5 million units this year, an increase of 1.1 million vehicles over 2009, then continue to steadily reclaim sales through 2015. The forecast is for the industry to reach 12.8 million units in 2011 and hit the 17.1-million mark by 2015—which would be roughly equal to the industry’s pre-meltdown peak of 17.3 million units, achieved in 2000.
By Brendan Moore
Sales in the United States auto market are expected to jump this month, with preliminary reports showing large increases due to a combination of incentives from all the major automakers (led by Toyota) and the recovering national economy.
Toyota has rolled out huge incentives in the form of low-interest and zero-interest loans, as well as subvented leases, in order to reverse the sales slide resulting from their particular hell of vehicle recalls, and the other automakers have rushed to respond, so as to remain competitive in the market. Consumers have responded en masse, and sales numbers for the month look very rosy so far.
But Chrysler is trending down 10% month-to-date from last year’s decidedly dismal results. Chrysler’s Fred Diaz, the company’s U.S. sales head, says not to worry.
Bloomberg reported today that GM’s GMC brand, which sells trucks and crossovers, may be on the chopping block, along with the previously-confirmed-to-be-on-death-row Hummer, Saturn, and Saab. GM’s most recent restructuring plan called for a focus on Chevrolet, Cadillac, and Buick as “core brands,” with GMC and Pontiac to be retained, but Pontiac becoming a “niche brand” with only a couple of models.
GMC is GM’s second bestselling brand, behind Chevrolet (albeit a distant second, with just 20% of Chevrolet’s sales). In 2008, GM’s divisional sales played out like this:
Chevrolet trucks: 979,286
Chevrolet cars: 811,233
GMC trucks: 361,739
It’s easy to see why it makes sense to kill Hummer and Saab (48,853 sales combined, while Chevrolet sold 54,058 Suburbans alone). Cutting their losses on Saturn also makes sense, because that’s the third-smallest sales volume in the lineup and has nearly all standalone dealers and a more flexible franchise agreement that makes it easier to terminate the brand. On top of that, Saturn has zero completely unique products. Every product that Saturn sells is available elsewhere at another GM brand: Continue Reading →
By Chris Haak
Hot on the heels of our earlier report of what to expect in the business plans submitted to Congress, Ford has published its 33-page (excluding appendices) presentation to the Senate Banking Committee.
We are all aware that Ford is in better financial health than its competitors due to Alan Mulally’s decision to mortgage nearly the entire company shortly after he joined the company, giving them access to working capital needed to complete the company’s restructuring and product lineup changes. In light of Ford’s healthier situation, the company is NOT asking for immediate money, but rather a credit line of up to $9 billion as a backstop in the event that market conditions further deteriorate. However, Ford expects under the “slightly improved rates” assumption (below) that the company can return to profitability, or at least break even, by 2011.
In the business plan document, Ford laid out three different industry sales scenarios – basically bad, worse, and worst – and what its government assistance needs would be under each scenario. Continue Reading →
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