If you're an investor in the automotive industry it's been hard not to ponder how much, and how quickly, General Motors' (NYSE: GM ) massive recall debacle would hurt its sales. If April is any indication, the negative publicity that has engulfed General Motors for months regarding its decision to avoid recalling vehicles with problems it was aware of for years might not have a large effect on sales. Here are some highlights and insights for the once, and perhaps still, troubled automaker.
By the numbers
First, let's dig into the cold, hard numbers. General Motors posted a 7% increase in April sales, compared to last year, for a total of 254,076 units delivered. Its retail sales were even slightly higher, up 7.5% in April for a total of 184,600 units delivered.
When breaking it down by General Motors' individual brands, Chevrolet led the charge, in terms of volume, with a 5.3% increase to 181,648 units in April, compared to last year. GMC was next in line with a 13% increase, the highest gain of all GM brands, to just over 39,000 units delivered in April. Buick and Cadillac brought up the rear with respectable gains of 12% and 5.1% to roughly 19,000 and 14,000 units, respectively, in April.
With all four brands under General Motors' umbrella posting year-over-year gains, here are some individual stars driving those performances in April.
One of the most significant highlights for General Motors investors was the sales gain by its most profitable products, the Silverado and Sierra. Sales of GM's two full-size trucks increased 8.5% and 21% in April with retail deliveries up 13% and 22%, respectively, compared to last year. That's a strong performance that will help boost profits for the automaker if it can maintain strong pricing while not overspending on incentives to lure customers.
GM's overall incentive spending was down from March and its average transaction price, or ATP, continues to improve from record levels set in the first quarter of 2014; GM's ATPs were up $2,000 per unit last quarter, versus the same period last year, according to J.D. Power. If that trend continued in April, it will have been a nice start for the second quarter.
Another highlight for General Motors was the figures from its luxury brand, Cadillac. Through the end of March Cadillac sales had dipped 7.3%, which had disappointed investors after the strong showing in 2013. Cadillac sales rebounded 5.1% in April which was its best April performance since 2007. The rebound was driven by the Cadillac CTS line, which was up 36%, and the SRX, which was up 31%.
"Retail demand was steady in April, and truck sales and transaction prices were especially strong," said Kurt McNeil, U.S. vice president of sales operations, in a press release. "As we expected, the economy continues to strengthen. In addition, our award-winning new products are performing well, we have more on the way and our dealers are winning accolades for outstanding service."
According to Edmunds.com, a review of its shopper consideration -- a percentage of visitors to the Edmunds.com website that viewed specific vehicles -- emphasizes that the negative publicity following the company hasn't deterred potential shoppers from viewing GM brands.
Obviously, it's still very early in the game for federal investigations surrounding General Motors' recalls and investors would be wise to keep an eye on monthly sales going forward because the impact could be just down the road. Another important factor for investors to watch will be if sales of the Silverado and Sierra slow down once Ford's next-generation F-150 hits dealerships later this year. If the 2015 F-150 takes market share from General Motors' full-size trucks and forces the automaker to increase incentives on the full-size trucks, it would leave GM in an undesirable position going forward. Meanwhile, in the grand scheme of the automotive industry, sales look to continue at a strong pace as interest rates remain low, many new models are scheduled for launch, and the housing and labor markets are gradually improving.
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