GM Shows Strong US Auto Sales, 2012 Outlook Remains Solid

by Trefis Team
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GM
General Motors
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GM (NYSE:GM) recently reported a 5 percent year-on-year (yoy) growth in its U.S. vehicle sales. This brought its total U.S. sales to more than 2.5 million units in 2011, a 14 percent yoy growth. [1] Among its American competitors, Chrysler posted an impressive 26 percent 2011 U.S. sales growth while Ford (NYSE:F) posted 11 percent U.S. sales growth. [2] Even though data for total U.S. vehicle sales in 2011 is not available yet, it is expected to grow 7.5 percent yoy, indicating market share growth for all three U.S. auto majors. [3] Market share gain for U.S. auto majors in 2011 came at the cost of Japanese auto majors like Toyota (NYSE:TM) and Honda (NYSE:HMC) as the latter were beset by production capacity constraints after the March earthquake in Japan and then floods in Thailand.

We currently have a Trefis price estimate of $26 for General Motors’s stock, which is around 25% above the current market price.

See our complete analysis for GM

While GM has managed to become the largest selling automaker globally, it will face a more severe competitive scenario going forward as Toyota and Honda emerge from their setbacks in 2012. But GM global sale outlook looks positive as U.S. economy has managed to grow gradually but steadily in spite of macro-headwinds coming from Europe. Many economists are predicting that U.S. economic growth will step-up in 2012 from their 2011 levels which will support sales in domestic market. Moreover GM plans to launch several new vehicles in 2012 which will help the company sustain its domestic sales growth.

GM’s recent agreement with its labor union will help it better control its costs of U.S. operations and support margin growth throughout 2012. While Europe will remain a concern this year, Asian auto-sales are expected to continue expanding strongly where GM has a strong market presence.

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Notes:
  1. GM’s U.S. Sales Increase 5 Percent in December []
  2. U.S. Auto Sales Finish Year Strong []
  3. Toyota’s U.S. sales edge up 0.4% in December []
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