Markets

Why We Should Take General Motors' Recent Claims With a Grain of Salt

The automotive industry has been divided when it comes to the midsize truck segment. Ford Motor Co. and Fiat Chrysler Automobiles respectively discontinued the Ranger and Dodge Dakota, while Toyota Motors and Nissan continue to sell the Tacoma and Frontier. General Motors initially followed its Detroit rivals before flip-flopping and recently bringing back the Chevrolet Colorado and GMC Canyon.

One thing is clear: GM believes it made the correct strategic decision and its marketing team is in full spin mode. Let's look at a few recent claims from GM and put some much-needed context around the arguments.

Not only does that add some important total sales context, it also shows the Tacoma is increasing its sales at a faster clip year to date. What's more important to investors, the amount of time vehicles spend on dealership lots or how rapidly total sales are increasing? General Motors is emphasizing the former, but in my opinion it's clearly the latter.

Chart by author. Information source: GoodCarBadCar.net.

Chart by author. Information source: GoodCarBadCar.net

Also, because midsize trucks are less expensive, the revenue and margins generated will be lower than for than full-size trucks. Now, this isn't to say the Chevy Colorado isn't valuable, it certainly is. It's just important for investors to understand the difference between "reinvigorating" the midsize market and ruling the full-size market, as Ford's F-150 does.

My spin

Maybe I'm being unfair to GM's midsize Colorado -- which for the record was named 2015 Motor Trend Truck of the Year and Cars.com's Best Pickup Truck of 2015, and seems to be a solid product -- but, some of these claims are clearly marketing spin and should be considered skeptically.

It will be a while before we can truly understand if GM's return to the midsize truck segment is truly reinvigorating the segment and just how valuable it is; chances are, we'll have to do some extra homework to add context to the claims.

This $19 trillion industry could destroy the Internet

One bleeding-edge technology is about to put the World Wide Web to bed. And if you act quickly, you could be among the savvy investors who enjoy the profits from this stunning change. Experts are calling it the single largest business opportunity in the history of capitalism... The Economist is calling it "transformative"... But you'll probably just call it "how I made my millions." Don't be too late to the party -- click here for one stock to own when the Web goes da

The article Why We Should Take General Motors' Recent Claims With a Grain of Salt originally appeared on Fool.com.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

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


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

In This Story

FCAU F TM GM

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More