GM's Stalled Engine

Global diversification can work wonders for a company’s performance. But it can’t work miracles. General Motors (GM) is Exhibit A. Bloomberg reports that GM expects to garner 75% of its revenue from outside the U.S. by 2010 versus 58% today. Compared with its U.S. operations, its business is booming overseas.

“GM has very aggressive growth plans in 2008, particularly if you look at markets like China, India, Brazil and Russia.'’

Preliminary results indicate GM set 2007 sales records in Europe, Asia and other non-North American markets, Wagoner said.

That’s fine and dandy, except for one small catch:

U.S. volume fell for the eighth straight year. GM lost $38 billion through September. Profits overseas weren’t enough to overcome losses at home and a $39 billion third-quarter deficit due mostly to a writedown of the value of future tax benefits.

Whoops.

Wagoner may have a good point when he notes that GM probably doesn’t get enough credit from investors/analysts for all these global opportunities. But when competitors like Toyota, BMW, et al can tap into the same opportunities without the excess baggage at home… why bother?