How A U.S. Auto Market Slow Down Will Affect GM
New vehicle sales in the U.S. auto market fell by 0.5% to 1.44 million units in the month of September. This happened even as average discounts rose 7.8% year over year to close to $ 3,400. Both major U.S. auto makers General Motors (NYSE:GM) and Ford Motor (NYSE: F) reported sales declines in the month of September. GM reported a 0.6% year over year decline as a 14% increase in Buick sales was offset by a 8% decline in sales from the GMC brand. In terms of product categories, sales of both pick-up trucks and crossovers fell while sales of passenger cars increased.
While this decline is most likely the result of unfavorable year over year comparisons, there still exists the likelihood that sales and profitability in the U.S. auto market might have peaked. The growing popularity of ride sharing services, electric vehicle technology and the potential introduction of autonomous driving in vehicles threaten the traditional auto industry model in the medium term. As a result, it is important to be clear about what is at stake if the slowdown is permanent.
The table below considers three scenarios for GM’s sales in the U.S. auto market and evaluates their impact on the company’s stock price. The bear case models a 2% annual decline in both trucks and cars for the company, resulting in a 10.1% decline in the company’s stock price. The bull case models a 2% annual increase in both new truck and car sales for the company, resulting in a 10.3% increase in the company’s stock price.
Have more questions about auto companies? Click on the links below:
- How Do Automotive Luxury Brands Compare In Their Performance In China?
- How Does GM’s performance vary across geographies?
- How Do Auto Luxury Brands Compare In The US?
- What Is Driving Changes In Ford’s Annual Unit Sales?
- How Much Money Does Ford Make Per Car Sold?
- How Much Has GM Been Investing In Growth Opportunities?
- How Ford’s Unit Pricing Differs Across Geographies?
- How Much Has Ford Been Investing In Growth Opportunities
- Ford’s Overwhelming Dependence On North America
- How Much Profit Does Ford Make Per Unit Sold In Each Geography?
- How Different China Growth Projections Impact Ford’s Bottomline
- How Ford’s Poor Russia Performance Is Obscuring Gains Made In Rest of Europe
- How Careful Targeting of F-Series Sales Helped Ford Boost Its Profits
- How Honda’s Automotive Business Is Faring In Japan
- The Most Significant Trends For Honda Motor Company
- Honda’s Brand Image Is Changing In The U.S.
- How Honda’s Automotive Performance Differs Across Geographies
- How Much Has Honda Been Investing In Growth Opportunities
- How Differing Japan Growth Projections Impact Honda Motor Company
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for General Motors
See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology