Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Wednesday, October 25, 2006

GM's News Not Good Enough

GM announced Q3 earnings. They were not bad. Revenue rose 3.5% to $48.82 billion. It's exposure to a bankruptcy filing at Delphi dropped.

But, GM's sales dropped 2.3% in the first half while Toyota continues it march up.

GM's shares have been up from $33 to over $36 in the last five trading days, and appear to be moving up again today. But, they may be reaching their top. Units sales have to count for something, and that is where GM is in trouble.

The size of unsold inventories on dealer lots is going to haunt GM and its fellow US car markers next year. Bank of America expects the Big Three to cut production another 8% in the first half of next year.

High inventory leads to price cuts. It leads to incentives. And, at companies like GM, it leads to more loses.

GM's numbers may get applause, but there is still another act to come in this play.

Sales do have to count for something

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

Powered by Blogger