The Motley Fool Previous Page

A High Voltage Month for General Motors

John Rosevear
April 4, 2012

March was a good month for most of the automakers: U.S. car and light-truck sales rose 13% versus year-ago numbers, making the first quarter of 2012 the strongest for auto sales since 2008.

That's a good sign for the overall economy. Auto sales have been sharply below recent historical trends ever since the economic crisis, as overleveraged consumers and businesses have put off major purchases. While sales still haven't recovered to pre-crash levels, improvements seen in recent months confirm that households and businesses are starting to spend again -- a good thing.

Just as with the economy, General Motors' (NYSE: GM  ) recovery remains a work in progress. But the General's sales results in March suggest that its efforts are moving things in the right direction.

Mass-market strength even as gas prices rise
GM's overall sales were up 12% in March, a bit behind the overall market, but as with rival Ford (NYSE: F  ) , the headline number doesn't really tell the story. And for GM shareholders, there are several stories worth telling in this month's batch of numbers.

For instance, until recently, GM tended to suffer when gas prices rose sharply, as worried new-car buyers opted for more fuel-efficient import models over GM's longtime strength -- SUVs. But now, while GM's product-line overhaul is still ongoing, it has sufficient strength in fuel-efficient cars to capture many of those sales.

GM's bread-and-butter brand, Chevrolet, posted a 17% increase in sales versus year-ago numbers, and every one of its car models saw a sales increase. The Cruze compact and Malibu sedan continued to post big sales totals, and the subcompact Sonic showed increasing momentum.

Significantly, even the much-maligned Chevy Volt showed newfound sales strength, with its best sales month ever -- exceeding its previous monthly sales record by 50%. Production of the innovative but controversial plug-in hybrid had been suspended because of low sales, but GM President Mark Reuss said on Tuesday that the company would resume Volt production a week earlier than planned.

Work remains as competition picks up
Not all was rosy for GM, though. Buick and Cadillac sales were both down over year-ago totals. Cadillac's problem is a simple one, namely a dearth of product, but the upcoming large XTS and small ATS sedans should help when they arrive at dealers in the next few months.

Meanwhile, though, competition in the mass market is heating up. While Honda (NYSE: HMC