Akerson’s Optimism Fuels 52-Week High for GM
General Motors (NYSE:GM) hit a fresh 52-week high of $30.28 on Wednesday morning following comments made by CEO Dan Akerson at a roundtable in Detroit. Shares have advanced 45 percent over the past six-month period, 28 percent for the past 52-week period, and are now trading near levels not seen since July 2011.
This tremendous growth comes on the back of a mix of catalysts. GM’s market share in the United States dropped about 1.7 points to 17.9 percent in 2012, as low as it has ever been. Some analysts have pointed to the drop as a sign of weakness heading into 2013, but the leader of the country’s largest car maker dismisses bearish claims with humble optimism.
Market share growth in the U.S. may be modest, argues Akerson, but the company is still the biggest player in town. Ford (NYSE:F) comes in second place with a 2012 market share of 15.5 percent, which also contracted about 1.3 points from 2011. It’s not softness on GM’s part that caused its market share to drop, but the aggressive recovery of Japanese competitors…
After the tsunami hit Japan in 2011, output from manufacturers like Toyota (NYSE:TM) and Honda (NYSE:HMC) plummeted, and GM’s share in the market inflated as a result. Now that Toyota is once again firing on all cylinders, it’s re-claiming market share at what only appears to be an accelerated rate. Toyota bumped its share up from 12.9 in 2011 to 14.4 in 2012.
Looking ahead to the future, Akerson aims to reclaim an investment-grade rating for GM by the end of 2013. According to Bloomberg, “The automaker currently has ratings of BB+ from Standard & Poor’s and Fitch Ratings and Ba1 from Moody’s Investors Service, the highest non investment-grade ratings from the three companies.”
“I want to see the best customer retention in the industry,” said Akerson, indicating that he wants GM’s stock to become a blue-chip investment by the middle of the decade.
Also by the middle of the decade, GM is looking to return its European business to profitability. Car sales in the region are at 20-year lows and the automaker has lost as much as $1.8 billion dollars as a result. The company is pursuing a tedious parts-buying and manufacturing relationship with PSA Peugeot Citroen in order to save costs. Progress has been slow but forward moving…
“We said we would get on four vehicle platforms and we got on three,” said Akerson on Wednesday. “It took longer than either party wanted but there was a lot of variability. Europe got a lot worse between February of last year and mid-year in terms of economic trends.” Without a doubt, Europe has been the company’s largest sore spot since it began to recover in earnest from the financial crisis.
Rounding out the catalysts leading to the company’s new 52-week high is the government’s announcement that it will be exiting its position in the company. With a sale of 200 million shares already announced, 300 million remain. With “Government Motors” soon to be behind it, GM can once again focus on becoming the world’s number-one auto maker.