General Motors Are Bound To Bounce Back in 2017!
When it comes to automobiles, General Motors is easily among the biggest names that come to mind. However, being elite in the industry does not always mean prolific news. General Motors sure had a good year in 2016, but the last quarter was not quite what the shareholders expected. The profit margins fell in the fourth quarter of 2016 unexpectedly!
What Led To The Fall?
The news of the not-so-good quarter spread like hot cakes and left everyone with one common question, “How?” For the most part, it was difficult to comprehend because GM had had a good year prior to the last quarter. The net profit margins fell from 5.6% in the previous corresponding quarter to 4.1%. The net profit fell to $1.8 billion. The share of GM in the US market also fell from 17.3% in the fourth quarter of 2015 to 17% in that of 2016.
The Notion
The reason was partly a false figment of the giant. Since crossovers and SUVs tend to yield higher profits, the company started focusing more on them. In pursuit of greater profits, GM also impeded the delivery of their cars to rental companies and focused on improving mass retail vehicle sales. Unfortunately, the tougher competition resulted in a fall of its truck-segment market share from 24.6% in 2015 to 24.2% in 2016.
The operating margin in the US also fell from 10% in 2015 to 8.4%-2016. Although the losses shrank in other parts of the world, especially Europe, there is still a good deficit to overcome.
The Future Looks Bright!
Although 2016 did not end as GM expected, the automaker is firm about bouncing back in 2017. The figures in Europe that decreased from a staggering $813 million dollars to $257 million dollars ensure that the company is surely on the correct path. Once it hits breakeven in Europe (projected to be in 2018), the global position and share of the auto manufacturer will also rise.
The Assurance
What adds to GM’s confidence is that despite the downfall in the last quarter of 2016, their performance was still better than that of Ford’s. GM plans on introducing more heavyweight vehicles with top-notch engines in the US market to attempt catering to the demand here.
General Motors also said that the weakened British pound has also impacted sales in the European region. As all of it is settled, the global sales are bound to get better. On the other hand, investors are more concerned about the fact that the unit sales in the US were not up to the mark.
All in all, the auto giant has affirmed that US sales and the resulting global profit margins are on the rise, and are bound to get better in 2017.
There are lots of auto manufacturers that operate in the US market. If you are looking forward to installing a replacement engine in your car, simply contact EngineWorld. We offer top-grade transmissions and used engines that are fully compatible with the USDM design specifications. To get one for yourself, or for further information, please dial (800) 903-4430 or email us at sales@engineworld.com.
Sources
https://www.gm.com/investors/earnings-releases.html
https://www.zacks.com/stock/news/248512/heres-why-general-motors-gm-stock-fell-after-earnings
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