GM Slides to Number Four for Global Revenue During 2014′s First Half
Though the recall woes of General Motors (NYSE:GM) haven’t seemed to hinder its sales here in the U.S., the big global picture shows a slightly different story. After rounding up the financial statements for the first six months of this year, it was revealed that GM brought in revenues of $39 billion, which puts it in fourth place among global automakers in terms of sheer money in-flow.
This seems to imply that while GM’s sales are holding up, they may not be growing at the rate they could be, were in not for the 30 million or so units with active recall notices on them, included a handful of 2014 models. First place Volkswagen AG led the charge with $68 billion in revenue, followed by Toyota’s $62 billion, and third-place Daimler AG with $42 billion.
However, when it comes to volume of cars produced, GM sits in third with 4.92 million units sold in the first six months of this year, trailing Toyota’s 5.1 million and VW’s 4.97 million. General Motors was once — and for a long time — the leading automaker that was a common target among others, but its dominant position has recently eroded, with no small thanks to its safety concerns of late.
“It’s a question whether GM will even maintain that position, with several other major manufacturers close to catching up – especially if the U.S. maker’s ongoing safety problems begin to erode its position in the marketplace,” the Detroit Bureau said in its report. GM’s position financially — in fourth — was largely due to a large surge at Daimler. But other global giants aren’t far behind; the Nissan-Renault alliance came in fifth, just $100 million shy of GM’s half-year revenues.
From an investing point of view, the financial performance of GM has fallen off a cliff when compared to its other mega-manufacturer cohorts. The recalls have resulted in write-offs amounting to over $1.2 billion, and earnings are running at $0.2 billion. This compares to Toyota or Volkswagen earnings at $5.7 billion and $4.35 billion, respectively. Honda, which came in ninth overall for revenue, was able to come out more profitable than GM, with profits of $1.94 billion for the April to June quarter.
Momentum in China is tapering for GM, while simultaneously picking up for Volkswagen, which enjoys the lead position in the world’s greatest auto market. Brazil has also been a sore spot for the Detroit-based company, so much so that GM recently announced that it has nearly $3 billion dogeared for investment in what is the most crucial market in South America.
Another issue is that Daimler and Volkswagen (and Toyota, too) all have very strong showings in the commercial sector, while General Motors does not. Though the Mercedes-Benz lines have been selling exceptionally well, it’s likely that the performance of its Freightliner, Mercedes-brand trucks, Fuso, and Thomas have helped boost its position immensely — the same could be said about VW’s Scania and MAN brands, which are leading companies in the European heavy truck scene.
While GM’s recent performance doesn’t necessarily look good on paper, it’s important to remember that overall financial performance may not be the be-all end-all. Being number one in the world implies that business is being run efficiently, but it comes with responsibilities and often with trade-offs when it comes to vehicle quality, due to the inherent scope of operations. So while GM won’t be sitting on top financially speaking, it might be doing the right thing in getting its ducks in a row before chasing the crown again.