General Motors Company (NYSE:GM) has made phenomenal improvements over the past several years. Its vehicles’ quality and design have improved, costs have dropped, and management has capitalized on opportunities throughout the world. However, General Motors Company (NYSE:GM) is still at the mercy of global demand. In this article, we’ll determine whether GM is a better investment than its peers.
Regional breakdown
The table below shows GM’s wholesale vehicle sales for the second quarters of 2012 and 2013. Wholesale sales data is GM’s largest revenue component — and therefore, its most important:
| Sales Region | 2012 | 2013 |
|---|---|---|
| North & Central America and the Caribbean | 760,000 | 809,000 |
| Western Europe | 290,000 | 276,000 |
| Asia, the Middle East, Africa, and Eastern Europe | 295,000 | 268,000 |
| South America | 265,000 | 278,000 |
| TOTAL | 1,631,000 | 1,610,000 |
Source: GM 10-Q for Q2 2012 and 2013.
As you can see, there has been a slight decline in total sales. While North and South America have been strong, sales in GM’s other regions have weakened.
Now let’s take a look at year-over-year market-share movement for the second quarter, based on General Motors Company (NYSE:GM)’s estimates.
| Sales Region | 2012 | 2013 |
|---|---|---|
| North & Central American and the Caribbean | 17% | 17.2% |
| Western Europe | 8.5% | 8.4% |
| Asia, the Middle East, Africa, and Eastern Europe | 9.3% | 9.4% |
| South America | 18.2% | 17.2% |
Source: GM 10-Q for Q2 2012 and 2013.
Important updates
General Motors Company (NYSE:GM) made another strategic move this past April, limiting costs over the next seven years by finalizing labor-agreement deals in Germany and Spain. You want to see this kind of long-term approach from any management team you invest in. General Motors Company (NYSE:GM) also plans on ending vehicle production at Bochum, Germany by the end of next year, which will reduce headcount and further cut costs.
On the negative side, General Motors Company (NYSE:GM) had halted production at a plant in St. Petersburg, Russia, due to slowing demand. It has recently resumed production, but the shutdown was two weeks longer than normal, and a weakening demand environment doesn’t sound good.
General Motors isn’t the only company seeing slowing demand in Russia. Ford Motor Company (NYSE:F) is also cutting production in the country because of slowing demand, especially for compact cars. The Association of European Business in Russia has stated that the auto market there has cooled, according to a Dow Jones report on Nasdaq.com.
If you’re considering an investment in Ford Motor Company (NYSE:F), as opposed to General Motors, consider that they tend to trade closely together.
