3 Reasons to Pay Attention to the Auto Industry in 2013
3) General Motors Company (NYSE:GM)
This stock is up 30 percent over the past 52 weeks, with gains over 18 percent for the last month. One glance at the stock chart and it looks like shares are beginning the long climb back to highs of nearly $40 per share that were briefly seen in January of 2011, shortly after its IPO.
GM is the second-largest car maker in the world and the largest in the United States, with total 2012 sales of 2,595,717 vehicles, a 3.7 percent gain on 2011. Total retail sales for the year were 1,922,458, a 3.1 percent gain over 2011. According to data compiled by The Wall Street Journal, GM commands about 18 percent of the U.S. car market.
The good news is that light-vehicle sales forecasts for 2013 are coming in at about 15 million, about 4 percent higher than the 14.4 million total vehicles that are estimated to be sold in 2012. This continues a trend of positive sales growth that began in 2009, when sales crashed following the financial crisis to just 10.4 million units, helping to prompt the GM bailout and its public offering.
The good news continues with the Treasury’s December announcement that it would sell 200 million shares of GM common stock, and pursue selling its remaining 300 million shares if market conditions are favorable. Shares have come up nearly 10 percent since the announcement.
The bad news is that GM’s market share dropped about 1.7 percentage points from 2011 to 2012. A general miasma of economic weakness in the United States opened the door for clever competitors who offered steep discounts or attractive financing.
And just to make things fair, the bad news continues for GM when we look toward Europe, where the company has faced billions in losses and will continue to face losses until as late as 2014, when the region’s auto market is expected to begin a recovery.
All that being said, the government’s sale of its stake in the company is nothing but good news. Combined with signs of a global economic recovery — as well as the growing recovery of the U.S. auto market — this company has tremendously positive indicators suggesting future strength.
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