GM is the third-largest automaker in the world in terms of the number of vehicles sold. GM commenced operations on July 10, 2009, after it completed the acquisition of substantially all the assets and certain liabilities of Old GM through a 363 Sale under the Bankruptcy Code. In the second half of 2010, the company achieved profitability.
GM seeks to distinguish its vehicles through superior design, quality, reliability, telematics (wireless voice and data), infotainment, and safety within their respective vehicle segments. Its business is diversified across products and geographic markets, with operations and sales in over 120 countries. GM assembles its passenger cars, crossover vehicles, light trucks, sport utility vehicles, vans, and other vehicles in over 70 assembly facilities worldwide and has close to 90 additional global manufacturing facilities.
GM is now focusing its resources on four core brands:
China, where GM operates through joint ventures, is the most valuable division of the company. Its U.S. operations come a close second.
GM, along with its joint venture partners in China, sells the second most number of vehicles in the world's biggest car market. In addition to being the biggest car market, China is also the world's fastest-growing car market, and the growth in the future years is expected to come from a boom in the SUV segment in the country. This is a segment in which GM is investing heavily. If the company leverages the opportunities inherent in this market, it can increase its equity per unit sold in China from close to $500 to $600, which would be a significant source of growth in the future. GM's mix is more tilted towards Tier 1 and Tier 2 cities as of now, but the company plans to remedy the same.
GM's average transaction price in the U.S. is much higher than in any other geography. This is primarily because of the high number of pick-up trucks it sells to commercial and retail buyers. Moreover, GM is undertaking moves to modernize its truck lineup, changing its bodies from steel made to aluminum made, which should make them lighter, more fuel-efficient, and easier to handle. This could boost their transaction prices from $ 32,800 in 2016 to over $ 35,800 in 2025. As a result, the company's profitability from this segment could continue to rise and help drive its overall profits.
GM's vehicle lease business had become very limited since 2008, when GM agreed to reduce its ownership in Ally Financial to less than 10%.
In October 2010, GM acquired AmeriCredit, an independent automobile finance company, for $3.5 billion and renamed it GM Financial. GM Financial aims to offer increased availability of leasing and sub-prime financing for its customers throughout economic cycles and to expand its vehicle lease and loan portfolio. GM is the highest-selling car company in the U.S., and the second-highest selling in China, the two biggest car markets in the world. Combining these two trends means that it is likely that GM's lease division is going to generate strong revenue in the coming years. For FY 2018 and 2019, the company reported revenue growth for the segment, with the effective interest rate contributing to the growth.
Due to regulatory requirements and high fueling expenditure, continued consumer preference for lighter, more fuel-efficient cars might result in an unfavorable mix of sales that might drive down average car prices. It is focusing on mobility initiatives and is working towards creating safer, better, and more sustainable vehicles in the future. General Motors is pursuing both hydrogen fuel cell technology and battery electric technology for its clean energy vehicles. The company will launch 20 new all-electric vehicles by 2023. The company is moving fast on the self-driving vehicle technology and has started testing these cars in San Francisco and will soon begin testing in New York.
As the size of the automobile market in developing countries continues to increase, additional international and domestic competitors will seek to enter these markets, and existing market participants will act aggressively to increase their market share. Increased competition may result in price reductions, reduced margins, and GM's inability to gain or hold market share.
In response, GM aims to pursue local and regional solutions to meet specific market requirements while aiming to improve its share in important markets, including South Korea, South Africa, Russia, India, and the ASEAN region.
GM manufactures more than half of its vehicles on a common architecture that is shared globally across its operations. This has resulted in lower investment per architecture and brand and will increase GM's product development and manufacturing flexibility, thereby allowing it to maintain a steady schedule of important new product launches in the future.
GM is focusing on the following to address market needs:
GM's continued investment in technologies that support energy diversity and energy efficiency, as well as in safety, telematics, and infotainment technology, will drive higher vehicle sales.
