) announced plans to invest $332 million in four plants in three
Great Lakes states in order to gain competitive advantage in
terms of fuel-efficient engines and transmission systems
The plants are located in Toledo, Ohio; Bedford, Ind.; and Flint
and Bay City in Mich. The investment at the plant will help GM
build a new V-6 engine, a new small motor and new eight-speed
Particularly, General Motors would invest $215 million in the
Flint Engine Operations in Flint for producing new three- and
four-cylinder engines; $55.7 million in Toledo Transmission
Operations in Toledo for producing a new eight-speed transmission
and expand capacity to build an existing six-speed transmission;
$31.7 million in a powertrain plant in Bay City for building
parts for a new V-6 engine and components for new small engines;
and $29.4 million in a metal castings plant in Bedford to
manufacture parts for small engines and for the new eight-speed
and existing six-speed automatic transmissions.
GM would also make an additional investment of $46 million at its
Romulus and Saginaw plants in Mich. to support production of the
new V-6 engine. All these investments will not make any addition
to the workforce but preserve 1,650 jobs at the six plants.
General Motors has been desperately trying to catch up with its
rivals in engines and transmissions technologies. Its competitors
are already producing 10-speed transmissions when the automaker
is lagging behind them providing only six-speed transmissions in
vehicles. Transmissions with more gears are more fuel-efficient
as they allow engines to do less work.
Late 2012, GM has joined hands with
Ford Motor Co.
) in developing a nine-speed transmission for passenger cars and
a heavier-duty 10-speed transmission for larger vehicles.
Chrysler Group - controlled by Italy's
) -already has the license to produce the 8HP 8-speed automatic
transmissions system (developed by Germany's ZF Friedrichshafen
AG) at its Kokomo Transmission Plant and the Kokomo Casting
plant, starting this year. This transmission system is used in
many vehicles produced by Germany's
General Motors has invested $10.2 billion in its North American
facilities since 2009. The company has vowed to invest $1.5
billion in its North American plants in 2013 as part of its $8
billion annual investment plan for its global operations for new
So far, GM has announced projects with an investment of $1.2
billion in the U.S. under the $1.5 billion plan. Last month, the
automaker announced investment of nearly $250 million for gearing
up its CAMI Automotive Inc. assembly plant in Ingersoll, Ontario
for future production.
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.
GM, a Zacks Rank #3 (Hold) stock, posted higher profits of $0.8
billion or 48 cents per share in the fourth quarter of 2012,
compared with $0.7 billion or 39 cents in the same quarter of
2011. However, earnings missed the Zacks Consensus Estimate by a
penny. 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, being
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.
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