Some group of investors must believe that the near-term prospects for General Motors Co. (NYSE: GM) are good. Short interest in its shares dropped by 7.8 million to 44.5 million. The period measured ended June 30.

The drop in short sellers does not make sense in most ways. GM’s shares have fallen 13% in the past three months to $31.40. The manufacturer continues to be dogged by recalls. The most recent was for 779,000 of its crossovers, which include its Chevy, GMC and Buick brands. GM’s 2014 recalls added up to over 30 million.

GM’s prospects overseas continued to be troubled. Its market share in Europe no longer drops each month, but after years of erosion, GM is no longer a force in the region. GM’s market share in China, the world’s largest car market, is among the highest of any manufacturer. But China sales for the entire industry have begun to slow sharply for the first time in decades. That trend may not reverse itself. China’s economy has entered a difficult period in which it is no longer growing at 10%. The country will be lucky if it posts a 7% GDP gain this year. Heavy air pollution in China also may limit car use in the nation’s largest cities.

GM has not done particularly well in the United States this year. Its sales for the first half are higher by 3.4% to 1,505,545. Its market share has held at between 17% and 18%. Large competitors such as Fiat Chrysler Automobiles N.V. (NYSE: FCAU) and Toyota Motor Corp. (NYSE: TM) have done much better.

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GM reports second-quarter earnings on July 23. Its revenue will rise only 2%, according to data from Yahoo! Finance, to $40.7 billion. However, EPS forecasters expect the June quarter to reach $1.10, up from $0.58 in the same period in 2014. GM’s improvement in this category will rely on a better bottom line, as write-offs for large recalls begin to disappear.

Investor hope for GM has a foundation in an earnings “beat” for the quarter about to be announced. The high-end of analyst estimates for second quarter is $1.30. That figure would be enough above the consensus to push shares sharply higher.

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