General Motors (GM) Rides On Truck Launches Amid Recall Woes

 | Aug 12, 2019 08:17AM ET

On Aug 9, we issued an updated research report on General Motors Company (NYSE:GM) .

The Detroit, MI-based auto giant is engaged in designing, building and selling of cars, trucks, crossovers and automobile parts worldwide. The company is also expanding the autonomous vehicle business.

In second-quarter 2019, General Motors’ earnings surpassed the Zacks Consensus Estimate. In the quarter, the sale of Chevrolet Silverado and GMC Sierra light-duty crew cabs grew year over year in double digits. This was the second consecutive quarter of witnessing growth for the same. This was in line with the automaker’s strategy to launch high-content, high-margin trucks. However, in the quarter, revenues missed the Zacks Consensus Estimate and were lower than the prior-year quarter figure.

Moreover, the sale of crossovers and trucks has grown modestly in the United States and China since 2015. In order to capitalize on this trend, the auto major revamped its crossover lineup. The company is launching all-new full-size pickups that will be followed by full-size SUVs.

However, of late, General Motors has been recalling vehicles in large numbers. In October 2018, the company announced that its China joint venture, Shanghai GM, will recall over 3.3 million vehicles in China from Oct 20. Further, in September 2018, General Motors recalled 1.2 million pickup trucks and sport utility vehicles across the globe due to problems pertaining to power steering. Also, the company is expected to face weak used-car pricing, a challenging pricing environment in the United States and China as well as more pressure on commodity costs.

In the past six months, shares of General Motors have outperformed the industry it belongs to. Shares of the company have gained 1.6% against the industry’s decline of 4%.