Toyota Motor Corporation (ADR) (TM), General Motors Company (GM): Fiat Is in Hot Pursuit of Chrysler

General Motors Company (NYSE:GM)’ expected five-year growth rate is similar to the industry average of 16%. The company’s May 2013 unit sales were up 3% compared to a year ago and were at their highest level since September 2008. GM notes strong sales in its mini, small, and compact car lines, which increased 27% in May and were led by models such as the Chevrolet Sonic and Cruze. The Cruze had its best May sales ever and the Sonic sold more units in May than it has in any month so far. Net losses were reported for the first-quarter of 2013 in GM North America, reflecting the continued slow growth in the U.S. economy.

Conclusion

Fiat’s purchase of additional Chrysler shares to complete its ownership of the automaker can benefit both companies. Fiat and Chrysler can restructure their debt to obtain better terms and a combined company should be able to compete more effectively with rivals Toyota Motor Corporation (ADR) (NYSE:TM) and GM, especially in the small car segment.

If Fiat creates a newly merged company and issues shares to the company’s current stockholders, investors could benefit from exchanging shares for a business with greater growth potential and long-term viability. It remains to be seen whether the combined company can meet its goal of 6 million units sales, however. Investors should watch for ongoing events surrounding the buyout and the final terms of the deal to evaluate the future impact on both companies.

Eileen Rojas has no position in any stocks mentioned. The Motley Fool recommends General Motors.

The article Fiat Is in Hot Pursuit of Chrysler originally appeared on Fool.com and is written by Eileen Rojas.

Eileen 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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