Friday, January 9, 2015

U.S., China And Lower Crude Prices Will Fuel General Motors' Growth

This article was first published by Seeking Alpha on December 22, 2014 .

By Sarfaraz A. Khan

General Motors (NYSE:GM), the second largest automaker in terms of sales volume, has been dealing with the problems related to faulty ignition switches.

So far, the company has received more than 2,300 ignition switch related claims. The company's lawyer has confirmed that 42 death and 56 injury claims are eligible for payment, nearly 300 have been rejected while the remaining are being studied.

The company, however, maintains that a majority of the claims are related to the old-GM, before the company filed for bankruptcy and was bailed out by the U.S. government. Nonetheless, the lawsuit continues to weigh on the company's stock. GM expects to pay between $400 million and $600 million as compensation.

The uncertainties regarding the lawsuit continue to weigh on GM's stock. The extraordinary number of 78 recalls this year of more than 30 million vehicles has also not helped.
Meanwhile, the company has been struggling in Europe, with car registrations falling by nearly 12% in November from last year's November. Overall, registration for GM vehicles have fallen by 4.2% in the first eleven months, despite 7.9% higher registrations from Opel and Vauxhall brands which was offset by lower registration for Chevrolet and other brands.

This was particularly disappointing considering that nearly all of the other players, from its European competitor Volkswagen (OTCQX:VLKAY) to its homegrown rival Ford (NYSE:F) to Japan's Toyota (NYSE:TM), witnessed an increase in car registrations in the EU in the first eleven months of this year.

Consequently, GM's shares have fallen by nearly …. read full article at Seeking Alpha