In fact, General Motors marginally outsold Toyota Motor Corporation (ADR) (NYSE:TM) in the second quarter of 2013 by reporting sale of 2.5 million cars against Toyota’s slightly less-than 2.5 million vehicles. One of the driving forces behind the Detroit car maker’s success is its popularity in China, where Toyota is struggling after the recent political clash between Japan and China.
Looking ahead
GM is pretty excited with the upcoming launches planned for the year. The company plans to roll out 18 new or redesigned models during the year. In fact, the revamped Silverado and Chevrolet Corvette are among the company’s fresh offerings. The primary purpose of coming out with fresh models is to improve the operating margin to 10% and compensate for the European losses. Akerson also aims to push China sales up to 5 million vehicles by 2015.
The company also formed a business service group last month, primarily to restructure back-office processes and cut costs by over 30% in the next four years.
The Detroit automakers expects to continue to gain from the surge in pickup demand in the second half of the year. The rebound in the housing sector is not a temporary phase; it is expected to improve and stay strong in the next few years.
However, as far as the international division is concerned, the weakening yen is giving General Motors a tough run for its money in the short run. This is working in favor of Toyota, Nissan and other Japanese auto giants as manufacturing cars in Japan is giving cost advantages.
The bottom line
General Motors Company (NYSE:GM)’s chief financial officer, Dan Ammann, rightly pointed out that risks related to the European macro environment are out of the company’s control. But keeping costs in check to narrow losses is within the company’s means. The automaker may be reporting lesser revenue in Europe compared to Ford, but it is nearing the break even-level faster. In fact the company is making good progress there and expects to break even in the European market by mid-decade.
In the domestic market, the redesigned Silverado and the GMC Sierra are bringing good money to the company’s pockets; all a credit to the housing-sector recovery. Though the company is facing tough competition from Ford in the pickup segment and arch-rival Toyota in the international division, I believe that there is huge potential in the stock. GM’s upcoming lineup is set to boost its sales and operating margins.
The article Looking Beyond GM’s Earnings originally appeared on Fool.com and is written by Rahul Chattaraj.
Rahul Chattaraj has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Rahul is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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