It has been a good few days for General Motors (
). The stock has gained more than 15% in the last two weeks on
recent good news involving strong auto sales in August and credit
rating upgrades from Fitch and then from Toronto-based
DBRS. That means the automaker will be able to borrow at lower
rates which will reduce its interest expense, and the upgrades also
signal that its outlook has improved.
GM's Brazilian sales in August are up 28% over the previous
month as the automaker sold a total of 75,872 vehicles in the
month. In total, vehicle sales rose 15% over the previous month to
reach a total of 420,100 units. Brazil's government reduced
auto taxes in May to spur the economy after vehicle sales growth
turned red in the first five months of the year. The tax cuts
were earlier scheduled to end in August, but the government has
decided to extend them by another two months. The sales should
help boost GM's South American operations whose margins had eroded
in the first half of the year.
See full analysis for General Motors
GM continued its strong performance in the U.S. as its August
10% to 240,520 vehicles helped by Chevrolet
Cruze, Chevrolet Equinox and Chevrolet Impala, which grew
19%, 22% and 28% respectively. Moreover, the automaker is investing
$220 million in two of its factories in Ohio to produce the new
Cruze compact car. Cruze is GM's second best selling vehicle
in the U.S. in the first eight months of the year with 154,813
Similarly, in China, GM and its joint ventures sold a total
of 220,996 vehicles in August, up 7.3% y-o-y. GM China is
the most important division for the automaker and contributes
around 38% to the stock price as per our estimates.
We currently have a
Trefis price estimate of $24.90 for General Motors's
, which is in line with the current market price.
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