Now that the numbers are rolling in, it's becoming clear that General Motors
That's not bad for a company that some say should have died three years ago -- and for a company that is still very much in the midst of a major overhaul. But while the General's not in bad shape, the company may find 2012 to be a much tougher slog, even if the economy continues to improve.
The trends in December's numbers
While the full-year numbers are strong, GM's December sales figures were less impressive on the surface, just a 5% increase over December 2010's totals. But December 2010 was a particularly strong month for GM, and this past month's numbers are better than they might appear at first:
- Fleet sales, GM's (and Detroit's) longtime bane, were up 17% -- but still accounted for just 19% of GM's total U.S. sales on the month. That's well below the 25% that GM's managers have cited as an ongoing target in the past, and it's a number that shareholders should feel comfortable with. Fleet sales -- a category that includes everything from pickups bought in quantity by contractors to rental cars to police vehicles -- are an important part of GM's business, albeit one that tends to carry relatively low margins. While a dependence on fleet sales to keep factories moving (something we'd start to worry about if the percentage of the total got above 30%) would be a danger sign, numbers like these are healthy.
- Buick sales were down 12% versus last year, but a big chunk of that drop is because of the phaseout of the Lucerne, the biggest of Buick's sedans, which ended production a few months ago. A replacement for the Lucerne is thought to be in the works, but GM hasn't yet shown or announced a successor in this category. Chalk this one up to GM's ongoing product-line makeover.
- Cadillac sales were down 2.7%, but it's a similar story there: The old mainstay DTS sedan was discontinued earlier in 2011, and its (much-improved) replacement -- a big sedan called the XTS -- is still a few months away from dealer lots. Meanwhile, sales of the CTS sedan and SRX crossover continued to be strong, with SRX sales up almost 25% over year-ago totals.
Chevy models showed considerable strength: Sales of the Cruze remained strong and well ahead of November's figures. And despite renewed competition from the Toyota
Corolla and Ford (NYSE: TM) Focus, the Camaro continued its surprising strength with a 20% year-over-year gain, and as with rival Ford, sales growth with GM's pickup trucks continued to outpace that of the overall market. And despite the media kerfuffle over the possibility of battery fires, the Chevy Volt had its best-ever sales month in December, with more than 1,500 units sold. (NYSE: F)
While it may be a few days before we have global sales totals, GM's U.S. results suggest that the company is in good shape despite its ongoing product transitions. For shareholders, that's critical. While the company technically sells more vehicles in China, the U.S. is still where most of GM's profits are generated.
But December's industry sales totals came with a warning for GM: 2012 may bring a much more challenging sales environment.
The big challenge ahead
What was the number that should concern GM watchers? It's this: Toyota's sales were flat in December versus year-ago numbers. After months of sales declines in the wake of production disruptions caused by last March's tsunami in Japan, a flat year-over-year result suggests that Toyota's recovery is finally complete, and that poses a big challenge for the General.
The production challenges faced by Toyota and Honda
But with Japan's recovery comes increased competition, as Toyota has made it clear that it will move aggressively to regain lost market share. And competition will be spiked further by Volkswagen, which has signaled that it will look to the U.S. for growth as its European home market has stalled. Meanwhile, Ford and Hyundai continue to move from strength to strength -- and Chrysler is mounting a surprisingly strong product offensive of its own.
For General Motors, which is furiously working on major new products that aren't scheduled to start rolling out until 2013, 2012 may prove to be a big challenge.
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