General Motors Is Better Than Ford: Here's Why

Despite the fact that the average age of an automobile in the U.S. has increased to over 11 years, the automobile sector has yet to benefit from this pent-up demand. Carriers are offering steep discounts, but September U.S. auto sales were down 0.5%.

Still, even with companies like Ford Motor Company (F) reporting significant drops in sales, General Motors Company (GM) has just about managed to stay on par with the overall market.

That's a big deal.

Here are the numbers

In September, sales for General Motors fell by only 0.6%.
When it comes to retail sales, the company posted a surge of 0.3% to 204,449 units, equal to the same period of 2015.

For comparison, Ford’s fleet sales dropped 21% compared to the previous month. Moreover, its retail sales decreased 4% throughout the prior month.
General Motors Is Better Than Ford: Here
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This has caused Ford to decrease its profit guidance, especially after publicizing a $640 million charge in the third quarter due to recalls.

Also Read: Avoid These 2 Automakers at All Costs

Given the better underlying performance of General Motors, it isn’t surprising that the stock has performed much better than peers like Ford. General Motors has surpassed analysts’ estimates for four successive quarters, marking a bullish trend. Due to the above-average results of September, the company has gained market share in 15 out of the prior 18 months in the U.S. Some analysts believes that plateauing demand for vehicles in

Due to the above-average results of September, the company has gained market share in 15 out of the prior 18 months in the U.S. Some analysts believe that plateauing demand for vehicles in United States will shatter General Motors earnings,. However, the company has not displayed any kind of weakness to believe this theory.

The future is brighter for GM

Looking ahead, General Motors recently publicized that its new Bolt will be priced at $37,500, keeping its promise to sell the Electric Bolt at an affordable price. The car model should prove to be a tough competitor for Tesla Motors Inc's (TSLA) upcoming Model 3 next year. The company’s plan to expand into the EV market aggressively may prove lucrative given the space is currently dominated by Tesla which has burdened by losses and debts.

This year, the company projects to sustain 10% margins in North America. China is another significant market for both General Motors and Ford, and presently, General Motors has a 14.6% market share compared to Ford’s deteriorating 4.5% share.

According to the reports from McKinsey, auto sales in China will surge to 24 million vehicles by 2020, as opposed to 21 million vehicles in the United States. Given General Motors’ better performance in this booming market, I think General Motors is a much better pick than Ford going forward.
Published on Oct 13, 2016
By Prudent Investor

Copyrighted 2016. Content published with author's permission.

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