GM to Invest $1.5B in N.A. Plants - Analyst Blog

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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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: F , GM , NSANY , TM

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