General Motors' Global Sales Rise 2%
General Motors Co.’s (GM) global sales in the first quarter of 2014 rose 2% year over year to 2,416,028 vehicles. The improvement was driven by strong performance in China and Europe.
General Motors performed well in almost all the global markets. The company reported improved sales in the U.K. and Germany. The results in Europe benefited from the increase in demand for Opel Mokka and the new Insignia flagship sedan. Mokka has sold 215,000 units since its launch in 2012, while Insignia recorded 85,000 units’ sales since its 2013 launch.
Among its top five markets in terms of sales volume, General Motors recorded the maximum gain in China with a 13% increase in sales to 919,114 units during the quarter. Last week, year-to-date vehicle delivery in the nation surpassed 1 million units.
Buick sales increased 14% globally in the first quarter. Cadillac’s global sales went up 9%, while sales in China surged more than 100% to 15,357 units.
However, General Motors’ global market share fell to 11.1% whereas Opel/Vauxhall gained traction in 10 European markets, including Germany. The company witnessed an increase in market share in China on rising demand for Buick Wuling and Cadillac brands.
General Motors expects to drive sales in the U.S. banking on the new products. However, headwinds in South America, particularly in Venezuela, remain a drag.
General Motors faces tough competition from German automaker Volkswagen AG (VLKAY) in China. Volkswagen expects to achieve a 10% increase in China deliveries to 3.5 million vehicles in 2014. In comparison, General Motors aims to gain an 8–10% increase to 3.4 million vehicles in China.
Even last year, Volkswagen managed to beat General Motors by about 10,000 units in China. General Motors’ sales rose 11.4% to 3.1 million vehicles in the nation.
General Motors is focused on increasing its production capacity in China. The automaker, along with its local partners, aims to enhance the GM-brand vehicles’ production capacity in the nation to 5 million by the end of 2015. Cadillac luxury cars sales in China are expected to almost double to 100,000 units by the next year.
Notably, General Motors plans to invest about $12 billion in China through 2017. The money will be used to develop five factories among which three are scheduled to open this year while the remaining two next year. These factories will help augment the production capacity of General Motors to 5 million. General Motors also projects production capacity growth of 65% by 2020 in China.
General Motors currently holds a Zacks Rank #4 (Sell).
Better-ranked automobile stocks worth considering are Tesla Motors, Inc. (TSLA) and PACCAR Inc. (PCAR). Both the stocks carry a Zacks Rank #2 (Buy).
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