GM's Auto Sales Rise in June
In a previous report, we had expressed our opinion on General Motor's (GM) financial results, as well as its future prospects. The latest U.S. auto sales data, reported by the company, and the recent good stock performance further confirm our long recommendation for the stock. Early on Tuesday, General Motors reported its U.S. auto sales, with the company selling close to 250,000 vehicles in June, up 16% versus the sales figure for the same period last year. GM shares were up 6.5% to $20.85 in recent trading.
Overall, June was a strong month for most auto manufacturers, including GM, which beat Ford (F)'s sales increases of 7%. Relatively lower oil prices and available credit were largely responsible for this healthy increase in the company's sales. For the month, GM passenger car sales were up 12% YoY, largely due to an increase in its Chevrolet Malibu sales, and a 21% increase in the sales of the Buick LaCrosse. The company also saw an increase in the combined sales of all Chevrolet, Buick, GMC and Cadillac crossovers. Truck sales also showed an improvement in June compared to the same month last year. Strength in numbers, especially for GM's trucks and SUVs, are a positive sign for the company, as there has been a rising consumer trend towards smaller, more efficient hybrid cars. GM's new launch, the Buick Verano, also performed well in the month of June, and its sales have been trending up since December 2011.
GM's sales data has come as a positive surprise, climbing by over 16%, and beating the 8% increase that was the consensus estimate for the company. The Seasonally Adjusted Annual Rate (SAAR) has also recovered for the Auto Industry, which is on the rise, and is expected to exceed the 2008 levels. The SAAR for May was booked in at 13.7 million vehicles, whereas the number is estimated to be in the 14 million range for June, which is comforting for auto manufacturers. We believe that General Motors is better poised to deal with international economic pressures, and the same is evident from the company's recent quarterly results. The company's international operations showed an improvement of almost 16% in revenues, up by $850 million. Moreover, GM has more financial strength than Ford, as it operates with minimal leverage.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.