General Motors Ditches 7% Stake in PSA and Ford Eyes Consumer Trends In 2014

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is 0.32% lower in afternoon trading after mixed economic data. On the downside, initial unemployment claims rose 68,000 last week to 368,000, higher than expected. Take the change with a grain of salt as the four-week moving average remains at 328,750 and was affected by Thanksgiving and other seasonal changes. On the bright side, retail sales rose 0.7% in November, which was slightly higher than expected, driven mainly by strong automotive sales. With the automotive theme in mind, here are two companies making headlines today.

GM's turnaround is focused on creating a leaner company. Photo credit: General Motors.

General Motors' (NYSE: GM  ) , which has seen its share price rise 40% year to date, announced its plan to unload its 7% stake in French automaker PSA Peugeot. GM will sell its entire stake of 24,839,429 shares through a private placement to institutional investors.

"Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed," GM Vice Chairman Steve Girsky said in a press release. "The alliance remains strong with our focus on joint vehicle programs, cross manufacturing, purchasing, and logistics. We're making good progress while remaining open to new opportunities."

The company also announced today it completed the sale of its 8.5% stake in Ally Financial, the one-time GMAC finance unit; the move is valued at roughly $900 million. General Motors projects to record a gain of approximately $500 billion that will be treated as a special item in the fourth quarter. This comes just days after General Motors announced it would pull its Chevrolet brand almost entirely out of Europe by the end of 2016, at a cost $700 million-$1.0 billion that will land primarily in the fourth quarter as well.

GM's fourth-quarter report is shaping up to be a complicated doozy, but one thing is for sure: The company aims to shore up its bottom line and increase its focus on becoming the leanest manufacturer it can be. That is good news for GM investors who hope its stock price will continue higher.

Ford's 2015 Mustang will take the global stage for the first time. Photo credit: Ford.

Meanwhile, cross-town rival Ford (NYSE: F  ) released some of its research regarding trends it expects to influence consumer behavior next year. While all its research points are full of interesting information, one caught my eye for next year.

According to Ford, "Innovation's Quiet Riot: Fast-paced and disruptive innovation is becoming increasingly institutionalized and ubiquitous -- fundamentally changing the way consumers work, play and communicate"

While this is obviously vague, and could mean many things, it immediately brought to my mind one important innovation that will be displayed in Ford's redesigned 2015 Mustang next year.

For the first time ever the Mustang will have an EcoBoost engine option -- an innovation that has been a marketing and sales gold mine for the Blue Oval. Ford's EcoBoost engine has a strong take rate, boosting margins, with some of its most popular vehicles. Consider that the take rate on the turbocharged engines are 89%, 52%, and 42% with its Escape, Fusion, and F-150, sequentially. Expect the new 2.3-liter to bring a new consumer to the Mustang with its projected class-leading fuel efficiency, while still creating exceptional power with 305-plus horsepower and 300-lb. ft of torque for the iconic muscle car. This innovative and fuel-efficient engine will be key if Ford wants success of its 2015 Mustang to be exported overseas, as it plans.

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  • Report this Comment On January 06, 2014, at 7:43 PM, lem2004 wrote:

    If it is anything other than a V8 it sure wouldn't interest me.EcoBoost is not all it is cracked up to be in my opinion.

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