General Motors Company (GM) Has a Lingering Pickup Inventory Problem

Risks ahead
More broadly, GM’s high pickup inventory level creates significant risks for the company’s 2013 profitability. If any unexpected development hurts demand for GM’s pickups, high inventories of the 2013 models will affect the launch of the new models, as discussed earlier. For example, competitors could ramp up incentive spending as they did in late-2012. Lower consumer confidence could impact sales in the next few months. Lastly, Toyota Motor Corporation (NYSE:TM) is launching its redesigned Tundra pickup at the Chicago Auto Show this month. Given the recent weakening of the yen (which makes U.S. sales more profitable for Toyota), Toyota could move to price the new truck aggressively in order to gain market share.

It is possible that none of these scenarios will materialize. However, until GM completes its pickup transition this year, the stock will be subject to an elevated level of risk, due to the potential for “hiccups.”

The article GM Has a Lingering Pickup Inventory Problem originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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