Despite Recalls, General Motors Company's Sales Are Rising

GM posted another solid monthly sales increase as the recall furor continues.

Jun 3, 2014 at 6:18PM

Images

Recalls? What recalls? Sales of the Chevrolet Corvette were up 268% in May, pacing another strong month for GM. Source: General Motors Co.

General Motors (NYSE:GM) said on Tuesday that its U.S. sales were up 13% in May, as a strong holiday weekend helped the General to its best monthly sales total since August of 2008.

GM's increase soundly beat analyst estimates, as the company continued to defy expectations that an ongoing recall scandal would impact sales of its latest products.

Strong retail sales suggest that the recall isn't hurting
GM's long-delayed recall of vehicles with defective ignition switches has led to a huge public outcry, a raft of lawsuits, a record fine -- and major changes within General Motors, as CEO Mary Barra has moved aggressively to fix long-standing problems within the company.

So far in 2014, GM has recalled over 15.8 million vehicles in North America, a huge number. Many analysts, including your humble Fool, have been concerned that the recalls and attendant publicity would have a negative impact on GM's ongoing sales.

But as was true a month ago, if the recalls are impacting GM's sales, the impact is hard to see. GM's retail sales rose 10% last month, outpacing rival Ford's (NYSE:F) 6% retail gain, as GM's new pickups and other recent models posted strong gains.

Another good month for GM's latest models, including the pickups
Sales of GM's new-for-2014 pickups, the Chevrolet Silverado and GMC Sierra, were up a combined 9.5% in May as GM continued to tweak its incentive offerings on the new trucks -- and as GM's dealers received larger supplies of new heavy-duty pickups, which went into production earlier this year.

Images

The upscale GMC Sierra pickup continues to sell well. Sales rose 14% in May. Source: General Motors Co.

Several of GM's most recent models posted strong results. Sales of the well-regarded new Chevy Impala sedan continued to rise, up 23% -- and Corvette sales more than tripled. The new Cadillac CTS sedan rose 39%, and the Cadillac Escalade, also all-new, gained 30%. At Buick, sales of the small Encore SUV more than doubled, while the Regal sedan gained almost 50%.

Some older GM models also posted strong results: The compact Chevy Cruze was up 41%, the Traverse crossover gained 23.5%, and Camaro sales rose 30%.

That last one might seem like a surprise. Chevy's Camaro is an older model, widely expected to be replaced next year. But its key competitors, Ford's Mustang and Fiat Chrysler's (NASDAQOTH:FIATY) Dodge Challenger, are even older. An all-new Mustang and updated Challenger are both due later this year, and Ford and Dodge dealers are selling down the last of the old models right now.

Last year's Cadillac darlings struggled again in May
GM also saw a significant gain in fleet sales in May, up 21%. But the company cautioned that the gain was something of a fluke: GM said that the big gain was due to the timing of some deliveries, May was likely to stand as its highest-volume month for fleet sales in 2014, and GM's fleet sales are likely to fall sharply in June.

Images

GM hopes that this attractive new coupe version of the Cadillac ATS will help revive flagging sales of the compact luxury model. Source: General Motors Co.

GM still has some weak points to contend with. Sales of the midsize Chevy Malibu have been sluggish even after a significant refresh last fall, and the Cadillac ATS and XTS sedans seem to have lost much of the momentum we saw last year. For the year to date, Cadillac sales are actually down slightly -- an abrupt change after an exceptionally strong 2013 gain.

Recalls will weigh on earnings, but good sales should help
GM's leadership, and its shareholders, still have good reasons to be pleased. The recall scandal continues to grind on, with more revelations expected in the coming days as GM is set to release the long-awaited report on its internal investigation. 

The costs of this quarter's recalls are already expected to take a $400 million bite out of GM's second-quarter earnings, on top of the $1.3 billion hit that GM took for recall-related costs in the first quarter. And more recalls could still be on the way.

But GM's U.S. sales are holding up, as is its pricing -- GM says that for the year to date, its average transaction prices are up about $2,700. 

So far, at least, the company and its new CEO are weathering the recall storm.

Special report: The top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers