General Motors (NYSE:GM) is currently the world’s second largest automobile original equipment manufacturer based on vehicle sales volume. GM sells cars, trucks and crossover vehicles, and offers vehicle leases and loans through GM Financial. Its business is diversified across products and geographic markets, with operations and sales in over 120 countries. In China, GM operates primarily through its three joint ventures. General Motors competes with players like Toyota (NYSE:TM), Honda (NYSE:HMC), Ford (NYSE:F), Daimler (ETR:DAI), Volkswagen (ETR:VOW) and Hyundai (SEO:005380).
We recently launched coverage of the company with a Trefis Price estimate of $45 for GM’s stock, which is about 25% above the current market price of $36.
The company’s brands include Cadillac, GMC, Buick and Chevrolet globally; Opel and Vauxhall in Europe; and Daewoo, FAW, Holden, Isuzu, Jiefang, Baojun and Wuling in other international markets. We’ve broken down our analysis of GM into eight major business segments as shown below.
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1. GM Cars U.S.
4. GM Europe
5. GM China
GM faced immense problems during the automobile crisis that followed the global crisis but has managed to restructure its business and come out stronger. The new GM commenced operations on July 10, 2009 after it completed the acquisition of substantially all of the assets and assumed certain liabilities of the old GM through a 363 Sale under the Bankruptcy Code. In the second half of 2010, it achieved profitability.
GM’s U.S. total vehicle sales business is the most valuable business for GM. The vehicle sales business in U.S. is closely followed by its vehicle sales business in China, where GM operates through three joint ventures and is the second most valuable region for GM. After GM sold its majority stake in Ally financial, GM’s vehicle lease business contributed only 5% to GM’s total valuation, but we expect GM’s vehicle leasing business to grow and become increasingly more valuable following the acquisition of AmeriCredit.
GM’s Brand Rationalization Strategy