GM to Invest $1.5B in N.A. Plants - Analyst Blog
January 22 2013 - 8:10AM
Zacks
General Motors Company (GM) revealed that it
will pump in $1.5 billion in its North American facilities in 2013
as part of its $8 billion annual investment plan for its global
operations for new vehicle development.
GM has invested $10.2 billion in its North American facilities
since 2009. In May 2011, the company had also initiated an
investment plan of $2 billion, targeting 17 assembly and components
plants in 8 states for 18 months in the U.S. The program, intended
to create or preserve more than 4,000 hourly and salaried jobs at
the plants, has been completed.
Recently, GM also mentioned that it would be able to save thousands
of dollars in costs per car in the production of next generation
Volt by adopting a more efficient design. The new design will help
the company use smaller vehicle components and save weight.
However, the company did not reveal the launch date of the plug-in
hybrid car.
Recently, at an industry conference in Detroit, GM stated that it
expects modest growth in global auto sales in 2013 as improvements
in China and the U.S. will be offset by sluggish car sales in
Europe. The automaker predicted a 5% rise in industry sales in the
U.S. and international market each and European market to shrink 4%
in the year.
The company foresees pricing pressures to exist, particularly in
China and Europe. However, it expects that moderate market share
gain across the world, driven by new vehicle launches will boost
its profit margins. GM plans to upgrade 70% of its global lineups
by the end of this year.
In North America, GM aims to boost market share and increase
vehicle pricing. The company expects to enhance profit margins in
the region to 10% in the next three or four years from 8%
currently. Meanwhile, the company has targeted break-even results
in Europe by 2015. In China, GM intends to improve margins by
continuing investing in Cadillac and rolling out its OnStar
communications, in-car safety system.
Many automakers started focusing on electric powered vehicles as
President Barack Obama’s administration set a goal of achieving 1
million battery-powered vehicles on the road by 2015.
In August 2012, Ford Motor Co. (F) announced its
plan to invest $135 million to develop key components, including
advanced battery systems, for its next-generation hybrid-electric
vehicles. The automaker is looking forward to doubling its
battery-testing capabilities to 160 individual battery-test
channels by 2013. It aims to boost development of hybrid-electric
vehicles by at least 25%.
Recently, Nissan Motor Co. (NSANY) announced that
it has started the production of all-electric 2013 LEAF at its
Smyrna, TN plant. The new LEAF will be produced together with the
company’s gasoline-powered products in the plant. The automaker
also opened its largest lithium-ion automotive battery plant in
Smyrna, which is adjacent to the LEAF assembly facility. The plant
will address the company’s goal of making zero-emissions mobility
around the world.
Last year, Toyota Motor Corp. (TM) had revealed
plans to unveil 21 gas-electric hybrid models by 2015, most of them
having a similarity with its widely acclaimed Prius. As many as 14
vehicles among these hybrids will be all new.
This apart, Toyota plans to launch a fuel cell vehicle, which runs
on hydrogen to produce electricity, by 2015. However, Toyota will
launch eQ (iQ EV in the U.S.) in limited numbers due to a
conservative view on the global hybrid vehicles market.
GM, a Zacks Rank #3 (Hold) stock, posted a 9.7% fall in earnings to
93 cents per share (excluding special items) in the third quarter
of the year from $1.03 in the corresponding quarter a year ago.
However, earnings per share in the quarter far exceeded the Zacks
Consensus Estimate of 61 cents.
Revenues in the quarter grew 2.5% to $37.6 billion, surpassing the
Zacks Consensus Estimate of $36.3 billion. Worldwide sales volume
inched up 1.6% to 2.3 million units from 2.2 million units a year
ago. However, total market share declined to 11.6% from 12.1% in
the third quarter of 2011.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
NISSAN ADR (NSANY): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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