GM Down on Weak Market Despite Higher Q2 Sales
Share price of General Motors Co. (GM) declined 1% to $37.10 on Jul 17 due to decline in the market, although the automaker reported sales of 2,505,889 vehicles globally in the second quarter of 2014. This highlights a year-over-year increase of 1.5%.
The upside was driven by better sales in the largest and most profitable automobile markets of the U.S. and China. Sales in the U.S. augmented 7% while the same in China went up 8%. However, total sales were partially mitigated by poor performance in South America, Asia and Eastern Europe markets.
With this, sales of the automaker in the first half of 2014 increased 1.4% to 4,921,928 vehicles. All the brands of General Motors recorded improved sales results.
The Chevrolet brand recorded strong sales in China in the first half of 2014. Moreover, strong sales of the Chevrolet’s new full-size pickups and large SUVs in North America helped General Motors to get better average transaction prices in the second quarter and the first half.
General Motor’s Buick brand recorded an 11% increase in sales in the quarter, up 12% year to date. The Cadillac brand’s global sales escalated 14% in the quarter, supported by a 51% increase in China. Year to date, deliveries went up 12% globally on a 72% rise in China sales.
Sales of the Opel/Vauxhall brand went up 3% in the second quarter and 4% in the first half. Also, Opel gained considerable traction in 11 European markets. Notably, in the first half of 2014, Mokka featured as the best-selling SUV in Germany.
General Motors is adopting strategies to promote its brand and expand globally. The automaker will be introducing its Cadillac brand in China and 27 new Opel models globally through 2018. The company also intends to explore new segments in North America with offerings like Chevrolet Colorado and GMC Canyon.
General Motors currently holds a Zacks Rank #3 (Hold). Some better-ranked automobile stocks worth considering include China Automotive Systems Inc. (CAAS), Magna International Inc. (MGA) and Meritor, Inc. (MTOR), all of which sport a Zacks Rank #1 (Strong Buy).
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