General Motors left 2016 with mixed concerns over its strength in the automotive market. The last quarter comprised of big November gains and innovations. On the other hand, the company faced a lawsuit and factory shut down. Could this be the end of GM? Or will it be the biggest year ever?
Back in 2016
The Detroit headquartered multinational American corporation posted series of good stuff before the end of 2016. After the massive net income in the third quarter, General Motors boasted on the strong Cadillac global sales which popped up more than 20 percent for the fourth consecutive month. It was followed by the 5.7 percent rally of delivery in China.
One of the most remarkable in the fourth quarter was the huge gains of Chevrolet, Buick, GMC and Cadillac in November. According to the press release of the company, General Motors successfully sold 197,609 vehicles after the 8 percent increase of individual or retail customers in the United States alone.
The strongest brands of the company made records as Chevrolet soared 5 percent for its best November since 2004 while Buick advanced significantly 22 percent after the all-time high in 2003.Also, GMC increased 9 percent and Cadillac was up 17 percent since the peak in 2001 and 2013 respectively.
GM managed to deliver almost 400,000 units in China in November, whereas three of its brands hit their all-time highs. GM China President Matt Tsien admitted that the company was on track for record sales in 2016 with less than a month to go.
Following the upbeat report, the company noted the contribution of the commercial and small business deliveries, the best transaction prices and the accumulation of profitable retail shares.
Here’s the statement of GM vice president of U.S. Sales Operations Kurt McNeil. “We are ahead of plan selling down our 2016 model year inventory and we expect to close out December with more retail share growth. GM is heading into 2017 in a position of strength with the planned launch of key new products, like the all-new Chevrolet Equinox, into the heart of the market.”
True enough, Cadillac reportedly increased 32.8 percent in global sales with over 30,000 vehicles sold in November, marking the sixth consecutive month of double-digit percentage increase. Chevrolet also delivered the first three Bolt EVs to customers In the San Francisco Bay last month.
Going Ahead 2017
To solidify the strength, GM will unveil its all-new Chevrolet Traverse on January 9. The announcement came after the $552 million allotment for U.S. manufacturing facilities located in Tonawanda, Lockport and Rochester, New York and Parma, Ohio.
Two weeks ago, GMNA Manufacturing and Labor Relations Vice President Cathy Clegg extended the commitment of the company to invest in its U.S. operations. “With these latest projects we have announced investments of $2.9 billion in 2016, allowing us to support the production of future engines and vehicles.”
It was seconded by the affirmation of UAW GM Vice President Cindy Estrada regarding the result of the reinvestment in the Tonawanda, Rochester, Lockport and Parma plants. “Our strategic bargaining efforts will keep and grow great American auto manufacturing jobs in places that have seen too much manufacturing disappear and will solidify the job security our members deserve.”
Here’s the detailed GM production announcement fact sheet:
- · New York: $333.66 million
Tonawanda Engine – $295.9 million for future engine production
857 retained and 67 new jobs
Lockport – $31.86 million for components
320 retained jobs (incl. 13 salaried)
Rochester – $5.9 million components
20 retained jobs
- · Ohio: $218 million
Parma Metal Center – $218 million for new presses, dies and sub assemblies
140 retained jobs
The Other Side
However, the company was reported about closing its five US factories this month after the lay-off of approximately 2,000 workers. GM was looking into the oversupply of sedans which had lost the interest of the car enthusiast specifically in the US. The unsold vehicles had been on the plate of the company prior to the shutting down of its auto assembly plants.
The Detroit-Hamtramck plant and Fairfax factory will be closed for three weeks while the Lansing Grand River plant will be down for two weeks. Two more factories in Ohio and Kentucky will be shut for a week.
The January shutdowns might cast pressure on the share, as the investors may lose their market confidence in the stock. Previously, the stock had started to go south as it dropped from its fourth quarter peak of 37.62 down to 34.83 at the close before New Year.
Further, GM got involved in a lawsuit filed by a dealer regarding the rules imposed by the company in assessing the sales performance of the dealers. According to The Second U.S. Circuit Court of Appeals in Manhattan, the company was unjust in determining the effectiveness of the dealership as it failed to consider the weak market of Chevrolet in New York.
Initially, Beck Chevrolet owner Russell Geller claimed that the company made use of a statewide average to limit the store’s sales targets. The unbalanced relationship between the manufacturers and the dealers could misjudge the credibility of the auto company, sending negative notion in the stock.
Despite the recent trouble that the company had, it could still have a soaring 2017 as the strategic plans and investment of the company can drive growth. Adding to this, the figures shown in the fourth quarter of 2016 may give the company an upbeat earnings report. Investors will take an eye on these and may give the company a good start. In general, the stock rallies after successful earnings data. It turned out; General Motors was performing well while other companies were racing in electric units and auto pilot software.