GM's Cadillac to Spur Growth in China - Analyst Blog
April 02 2013 - 8:50AM
Zacks
General Motors Company (GM) revealed that its
luxury lineup Cadillac will register a robust 50% rise in sales in
China and sell 45,000 to 50,000 units of the vehicle in 2013. In
contrast to this, the company expects a lower though impressive
growth of 32% in Cadillac sales in the U.S. by selling more than
187,000 units of the vehicle.
According to Cadillac brand chief Bob Ferguson, Cadillac sales will
mainly be boosted by XTS (which is already produced in China) as
well as ATS and revamped CTS, which will go into production later
this year. General Motors recently launched a new CTS sedan at the
New York International Auto Show.
Bob Ferguson expects Cadillac sales to increase threefold in China
over the next three years. Currently, General Motors operates 200
Cadillac dealerships in China.
The U.S. automakers, including General Motors Company (GM) and Ford
Motor Co. (F), performed quite well in China in 2012. For the full
year, GM’s sales grew 11.3% to 2.84 million units while Ford sold
626,616 vehicles in the year, up 21% from 2011.
However, sales of Japanese automakers lagged due to the conflict
between Beijing and Tokyo over a group of uninhabited islands in
East China, hurting the consumer sentiment. Sales of Toyota Motor
Corp. (TM) slid 4.9% to 840,000 vehicles in 2012 while sales of
Honda Motor Co. (HMC) dipped 3.1% to 598,577 vehicles in the
year.
According to the China Association of Automobile Manufacturers
(CAAM), auto sales in China are expected to rise 7% to more than 20
million vehicles in 2013, led by strong demand for passenger
vehicles and economic recovery. The association believes SUVs will
remain the fastest- growing segment in the year while commercial
vehicles will record a moderate gain in sales.
However, the Chinese government is concerned about rising air
pollution in the country due to the ever increasing vehicles on the
road. As a result, China’s State Council announced a stricter
standard for auto fuel recently, which will be promoted nationwide
by 2017. These steps may damage the health of the auto industry in
China.
GM, a Zacks Rank #3 (Hold) stock, posted a rise in profits to $0.8
billion or 48 cents per share in the fourth quarter of 2012,
missing the Zacks Consensus Estimate by a penny, compared with $0.7
billion or 39 cents in the same quarter of 2011. The results
excluded net gain from special items of $0.1 billion or 6 cents in
the 2012-quarter and net loss from special items of $0.2 billion,
or 11 cents in the 2011-quarter.
Revenues in the quarter scaled up 3.4% to $39.3 billion, which was
higher than the Zacks Consensus Estimate of $38.6 billion. Unit
sales escalated 4.2% to 2.3 million vehicles. The automaker
occupied a market share of 11.5% during the quarter, down from
11.6% in the year-ago quarter.
GM expects to boost its top-line in 2013 with the help of new
vehicle launches. At the same time, the company believes cost
control measures will boost its bottom line growth. It expects 2013
capital expenditures to be at the 2012-level.
General Motors Company (GM) revealed that its luxury lineup
Cadillac will register a robust 50% rise in sales in China and sell
45,000 to 50,000 units of the vehicle in 2013. In contrast to this,
the company expects a lower though impressive growth of 32% in
Cadillac sales in the U.S. by selling more than 187,000 units of
the vehicle.
According to Cadillac brand chief Bob Ferguson, Cadillac sales will
mainly be boosted by XTS (which is already produced in China) as
well as ATS and revamped CTS, which will go into production later
this year. General Motors recently launched a new CTS sedan at the
New York International Auto Show.
Bob Ferguson expects Cadillac sales to increase threefold in China
over the next three years. Currently, General Motors operates 200
Cadillac dealerships in China.
The U.S. automakers, including General Motors and Ford
Motor Co. (F), performed quite well in China in 2012. For
the full year, GM’s sales grew 11.3% to 2.84 million units while
Ford sold 626,616 vehicles in the year, up 21% from 2011.
However, sales of Japanese automakers lagged due to the conflict
between Beijing and Tokyo over a group of uninhabited islands in
East China, hurting the consumer sentiment. Sales of Toyota
Motor Corp. (TM) slid 4.9% to 840,000 vehicles in 2012
while sales of Honda Motor Co. (HMC) dipped 3.1%
to 598,577 vehicles in the year.
According to the China Association of Automobile Manufacturers
(CAAM), auto sales in China are expected to rise 7% to more than 20
million vehicles in 2013, led by strong demand for passenger
vehicles and economic recovery. The association believes SUVs will
remain the fastest- growing segment in the year while commercial
vehicles will record a moderate gain in sales.
However, the Chinese government is concerned about rising air
pollution in the country due to the ever increasing vehicles on the
road. As a result, China’s State Council announced a stricter
standard for auto fuel recently, which will be promoted nationwide
by 2017. These steps may damage the health of the auto industry in
China.
GM, a Zacks Rank #3 (Hold) stock, posted a rise in profits to $0.8
billion or 48 cents per share in the fourth quarter of 2012,
missing the Zacks Consensus Estimate by a penny, compared with $0.7
billion or 39 cents in the same quarter of 2011. The results
excluded net gain from special items of $0.1 billion or 6 cents in
the 2012-quarter and net loss from special items of $0.2 billion,
or 11 cents in the 2011-quarter.
Revenues in the quarter scaled up 3.4% to $39.3 billion, which was
higher than the Zacks Consensus Estimate of $38.6 billion. Unit
sales escalated 4.2% to 2.3 million vehicles. The automaker
occupied a market share of 11.5% during the quarter, down from
11.6% in the year-ago quarter.
GM expects to boost its top-line in 2013 with the help of new
vehicle launches. At the same time, the company believes cost
control measures will boost its bottom line growth. It expects 2013
capital expenditures to be at the 2012-level.
FORD MOTOR CO (F): Free Stock Analysis Report
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TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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