Maybe GM ran out of gas as 2006 closed. The stock was up over 50% for the year, but has sold off recently. It could be a breather, or it could be the end.
While Toyota is burying GM in the US, there is at least some evidence that the company’s share in its home market is stable. But, with its current piece of the pie at just under 25%, it can’t bleed any more. The $9 billion that has been taken out of North American operations won’t save the company if it can’t sell cars.
GM’s smartest moves may be outside North America. The company is doing extraordinarily well in China. That will not save the company short term, but could be a tremendous financial benefit in a few years.The world’s largest auto maker has now passed VW as the No.1 car maker on the mainland, as they call it in Taiwan.
GM’s stock still trades at well under 10% of sales. DaimlerChrysler trades at .32 times sales.
If GM does reasonably well, the stock’s run is not over.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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