GM Just Had a Huge Quarter, But It’s Not All Sunshine and Rainbows
There was some great news out of General Motors headquarters to close out the week, as the company proudly announced that it had its best third quarter in terms of global sales since 1980. That’s right: GM moved more vehicles in the past few months than it has over the same time period for the past 34 years.
Obviously, that’s plenty of reason to celebrate, especially considering the fact that the company has fought tooth and nail through what is likely its roughest year in history. In a press release, GM says that Chevrolet sales spiked 9% in North America, Cadillac sales rocketed up 63% in the Chinese market, and Buick sales on a global scale shot up 7%. In all, GM sold more than two, 449,000 vehicles worldwide during the third quarter, which is a 2% increase over 2013.
Digging deeper into the numbers, the fantastic third quarter showing puts GM’s nine-month total so far for 2014 at nearly 7.4 million in total sales, up 2% from last year. Also of note, sales in the United States and China — the company’s two largest markets — are up 4% and 12% for the year as well. This puts GM on track to surpass expectations, especially in the Chinese market, where the company sold 3.16 million vehicles in 2013. Executives say they expect the company to overtake or come close to that number. September also saw GM overtake the 20 million mark in terms of cumulative vehicles sold in China.
“GM delivered its best third quarter global sales in 34 years thanks to solid growth in the United States and China, and steady improvement in Opel’s market share,” said GM CEO Mary Barra. “We have launches now underway, including the Chevrolet Colorado and GMC Canyon in North America, the Opel/Vauxhall Corsa in Europe, and the Buick Envision and Cadillac ATS-L in China, that will keep our momentum going.”
The spike in sales is definitely a victory for General Motors, but again, what makes these numbers particularly impressive is the sheer amount of adversity the company had to overcome to make it happen.
As everyone remembers, General Motors unleashed a wave of recalls at the beginning of the year that had many wondering how it would ever recover. So far, the company has had to recall more than 30 million vehicles, and are in the process of sorting out the legal repercussions involving the infamous ‘ignition switch’ issue, which has so far led to the deaths of many drivers.
That issue is what is keeping the company from looking forward to a brighter future, despite the fact that it just had the best third quarter in 30 years. As Bloomberg reports, GM has just been hit with the biggest in what has been a series of lawsuits stemming from the recalls. In this most recent case, drivers of 27 million GM cars, trucks, and SUVs are seeking $10 billion in compensation as a result of the declining values of their vehicles.
“New GM repeatedly proclaimed that it was a company committed to innovation, safety, and maintaining a strong brand,” the filing says, according to Bloomberg. “The value of all GM-branded vehicles has diminished as a result of the widespread publication of those defects and New GM’s corporate culture of ignoring and concealing safety defects.”
The complaint also goes on to say that GM artificially kept vehicle values afloat while hiding at least 60 serious issues.
But that’s not all. GM is also facing another lawsuit — albeit smaller in scope. The aforementioned suit concerning the 27 million vehicles only concerns vehicles that were built after the company faced bankruptcy in the middle of the financial crisis in 2009. The other suit involves vehicles made before the company was bailed out by the U.S. government, specifically concerning the loss of value of Chevrolet Camaros and certain models of the Pontiac Solstice.
But getting back to the much more serious issue of the ignition switch recall, attorney Kenneth Feinberg said that as of October 10, 27 cases have been approved for compensation. Feinberg is in charge of running GM’s victim fund, which is responsible for payouts to the families and victims of those effected by failing ignition switches. There was between $400 and $600 million set aside by GM brass specifically for that fund, of which Feinberg has reportedly received 1,371 claims, 1,193 of which concern non-fatal injuries.
Again, despite all of these issues and legal battles, GM is pulling through in terms of sales. The very fact that the company hasn’t chased away its customer base — and is instead attracting more consumers than it was even before the recalls started to pile up — really speaks to the ingenuity and perseverance of GM’s leadership and marketing prowess.
Now, the question is whether or not this a fluke, or if GM can sustain sales and growth to finish the year out.
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