GM's Silver Lining

GM's news recently has been mixed, but the negative comments about June and July sales trumped the positives of the employee buy-outs and the stock skidded down sharply.

GM expects poor comparisons to last summers sales, but there are some good reasons and buried in these may be the key to the company's recovery. In June of last year, GM offered employee pricing for all customers which drove up sales sharply. However, it also drove down the company's yield and profit per vehicle.

GM's strategy has shifted markedly. With cost dropping, yield-per-vehicle is becoming just as important as absolute unit sales. GM also has several "hot" cars like the Pontiac Solstice that are selling very, very well.

The key to the GM recovery may be its rising price per car. For the first five months of the year, the company was able to fetch an average of $26,431 per vehicle, up $1,200 over the same period a year ago.

If GM can keep its yield-per-vehicle high, the critical comparisons will not be with last year's summer employee discount sales periods, but with the fall months when new models hit the dealers.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies he writes about.