No stranger to dealing with catastrophic economy woes, Ford
Motor Company (NYSE:
) and General Motors Company (NYSE:
) must rev up for potentially disappointing revenues headed their
way - except this time around, it's a foreign sector that will be
dishing out poor results for the companies.
Europe has been experiencing much of what the U.S. went
through in recent times when it came to monetary hardships, and
just like Europe undoubtedly felt partial backlash from America's
economic disaster, American companies are now feeling the adverse
effects of international fiscal blunders.
Unfortunately, those that cannot afford to take a hit are
doing just that. According to Thomson Reuters, F will likely lose
between $500 million and $600 million in Europe alone this year.
The company came to this realization when refurbishing its
internal five-year plan.
Following this news, GM is striving to bump its sales volumes
elsewhere this year in an effort to offset the devastation the
automaker is feeling from Europe's trying times. Specifically, GM
will work to ramp up sales in
several times over.
The issues currently plaguing auto customers overseas do not
end with the purchase of motor vehicles. Europeans are replacing
as well, as they try to tighten their belts in uncertain times.
As the debts of countries such as Greece and Spain continue to
deplete investor confidence in economic turnaround, customers of
both F and GM will likely remain strapped for cash.
Experiencing challenging quarters as of late, both F and GM
cannot afford to deal with anymore disappointment. According to
Jefferies, May was not a particularily glamorous quarter for
automakers in the U.S.
"May's U.S. light vehicle SAAR of 13.7mn missed consensus by
5% and was the first month below 14.0mn this year. That sales
missed so widely is concerning given a handful of auto-centric
tailwinds in May. Strong auto sales had previously been a key
macro highlight. Unfortunately, May's results were befitting of
Friday's weak jobs report and followed weaker Chicago PMI, China
PMI, and int'l airfreight data, making it a "weak week" overall,"
Jefferies said on Monday.
Challenging times are not dissipating anytime soon, or so it
appears. However, there is light at the end of the seemingly
endless tunnel. Morgan Stanley believes GM's management is on the
right track in terms of execution and strategy, with small wins
building up confidence and credibility.
F's fate is not yet doomed either. Despite a rocky month, May
sales were still up 13% over this time last year.
As economic turmoil continues to fester worldwide, citizens of
said countries are continuing to hold back in terms of spending.
However, with strong management and increased sale efforts, it
appears money issues won't be able to stand in the way of
companies built Ford…or General Motors, tough.
GM closed yesterday at $21.85, up 7.79% year-to-date, while F
closed yesterday at $10.55, down 1.95% year-to-date.
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