Running head: GENERAL MOTORS
Assignment #5 General Motors
This report discusses General Motors Corporation, one of the largest auto manufacturers globally, manufacturing cars and trucks in 34 countries and its subsidiaries. This assignment is an analysis of General Motors Corporation’s financial stability. It is hoped that these findings illustrate the strengths and weaknesses of the company’s common stock as a potential investment opportunity. GM currently focuses on four brands as well as strategic joint ventures with other automotive brands worldwide. GM operates under the core competencies of technology, leadership, large scale operations, and product & research development (www.gm.com).
Despite the large scale operations of the company, GM has multiple areas of concern that need to be addressed in order to sustain long term value for both stakeholders and shareholders. Preliminary results of this analysis indicate that GM suffered enormous financial losses as a result of poor product quality, lack of consumer appeal, lag in alternative fuel technologies, inefficient plant production, and a saturation of similar car models amongst their brands. Due to these factors, consumer perception has plagued the company‘s sales, resulting in a steady decrease in market share across all platforms (www.gm.com).
Assignment #5 Financial Research Report - GM
General Motors Company develops, produces, and markets cars, trucks, and parts worldwide. GM also provides automotive financing services through General Motors Financial Company, Inc. (GM Financial). The company was formerly known as NGMCO, Inc. and changed its name to General Motors Company in July 2009. General Motors Company is based in Detroit, Michigan (finance.yahoo.com). In efforts to reinvent its global presence, General Motors decided to focus on its "core brands" - Chevrolet, Cadillac, GMC, and Buick. Pontiac became a "specialty" brand that sells niche vehicles. Saturn, Saab, and Hummer were either closed or sold. To stay competitive in the highly competitive automotive industry, GM managers tried to identify which factors helped to determine consumer vehicle preferences in each of its automotive segments. These factors include: price, quality, available options, style, safety, reliability, fuel economy and functionality (finance.yahoo.com). December 31, 2010 GM’s worldwide market share grew but not significantly. Vehicle sales volumes in at year end were consistent with a gradual U.S. vehicle sales recovery from the negative economic effects of the U.S. recession first experienced by Old GM in the second half of 2008. December 31, 2009 combined GM and Old GM worldwide market share imploded. In 2009 the U.S. continued to be negatively affected by the economic factors experienced in 2008 as U.S. automotive industry sales declined drastically when compared to those of December 31, 2008 (finance.yahoo.com). December 31, 2008 the Old GM’s worldwide market share was dire. In 2008 worldwide market share was severely affected by the recession in Old GM’s largest market, the U.S., and the recession in Western Europe. Tightening of the credit markets, increases in the unemployment rate, declining consumer confidence as a result of declining household incomes and escalating public speculation related to Old GM’s potential bankruptcy contributed to significantly lower vehicle sales in the U.S. These economic factors had a negative effect on the U.S. automotive industry and the principal factors that determine consumers’ vehicle buying decisions. As a result, consumers delayed purchasing or leasing new vehicles which caused a decline in U.S. vehicle sales (finance.yahoo.com). GM’s automotive operations meet the demands of its customers through four automotive segments: GM North America (GMNA), GM Europe (GME), GM International...
References: Berk, J., & DeMarzo, P. (2010). Corporate Finance: The Core: 2010 custom edition. (2nd Ed.).
Boston: Pearson Education.
General motors. (2011, May 03). Retrieved from http://finance.yahoo.com
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