Tag Archive | "General Motors Co."

GM, Ford Top Analysts’ Sales Estimates in Best Month of 2010

General Motors Co. and Ford Motor Co. reported U.S. sales increases that topped analysts’ estimates as consumers returned to showrooms, making October the best month for vehicle deliveries in more than a year, Bloomberg reported.

GM’s sales climbed 3.5 percent to 183,759, the Detroit- based automaker said today in a statement. Sales at Ford increased 15 percent to 157,935, the Dearborn-Mich. based company said. Five of the top six automakers by U.S. sales reported gains, and Toyota Motor Corp. had a decline.

Industrywide light-vehicle sales rose to a 12.3 million annual rate in October, researcher Autodata Corp. said today. That’s the fastest since the U.S. government’s “cash for clunkers” incentive program lifted the pace to 14.2 million in August 2009. The average of nine analysts’ estimates compiled by Bloomberg was for the rate to reach 11.9 million last month.

“Consumers who have a job are feeling a little bit better and not fearing every Friday anymore,” said Rebecca Lindland, an analyst at researcher IHS Automotive in Lexington, Massachusetts. “They feel like the worst is over and they’re starting to trickle back into showrooms.”

GM, the largest U.S. automaker, exceeded expectations for a decline of 6.3 percent, the average of three analysts’ estimates, as customers bought more Buick and GMC brand vehicles.

Buick sales climbed 39 percent to 12,569 vehicles, led by a 53 percent increase in deliveries of the Enclave sport-utility vehicle, GM said today. GMC sales gained 30 percent to 33,136.

Ford’s gain topped the 14 percent average estimate of six analysts on record sales of Fusion sedans. Fusion sales gained 29 percent, while F-Series rose 24 percent, pushing deliveries of the pickups past last year’s total in the first 10 months of this year.

“That’s a good harbinger of the economy starting to move forward,” Ken Czubay, Ford’s U.S. sales chief, said on a conference call with analysts. “It’s good to see the industry nudging forward.”

Ford will seek to boost Lincoln sales with more marketing through the end of the year, Czubay said. Lincoln sales rose 1.5 percent in October compared with a 21 percent increase for Ford- brand vehicles.

“Lincoln just isn’t yet playing in the big leagues with legitimate luxury cars,” said Michelle Krebs, an analyst with automotive researcher Edmunds.com. “Lincoln is in neverland right now. It needs new products.”

Ford rose 75 cents, or 5.2 percent, to $15.18 at 4 p.m. in New York Stock Exchange composite trading, the highest closing price since July 28, 2004.

“Ford has been a phenomenal winner for us,” said Frank Ingarra, co-portfolio manager at Novato, California-based Hennessy Advisors Inc., which held 407,700 Ford shares as of Sept. 30. “They were a lot more nimble than their competitors, moved a lot quicker, took out parts of the company they needed to and have reemerged.”

The Federal Reserve said today it will buy an additional $600 billion of Treasuries through June, expanding record stimulus in an effort to boost growth and reduce unemployment. The U.S. economy expanded at a 2 percent annual rate in the third quarter, the Commerce Department reported Oct. 29. The jobless rate is projected to stay above 9 percent through next year.

“We have a recovery with a lot of weight on its back,” said Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio, and a former General Motors Corp. economist. “For vehicle sales to jump a heck of a lot more, it’s going to take stronger growth, job creation and higher levels of confidence than what we’re seeing.”

Chrysler Group LLC’s sales rose 37 percent from a year earlier to 90,137 vehicles. The automaker, based in Auburn Hills, Michigan, posted a 29 percent gain in deliveries of its namesake brand and said sales of its Jeep line more than doubled on higher demand for its redesigned Grand Cherokee SUV. Deliveries of the Ram pickup rose 41 percent to 17,316.

Chrysler was expected to report a 41 percent sales increase, the average estimate of six analysts.

“Most of what we’re seeing from Chrysler is either fleet- and rental-based or incentive-fueled sales, so it’s a bit harder to judge Chrysler,” said Jesse Toprak, vice president of industry trends at Santa Monica, California-based TrueCar.com. “We don’t expect a real recovery in their retail sales until the Fiats start rolling in next year.”

The U.S. auto selling rate has stayed above 11 million since March, according to Autodata, based in Woodcliff Lake, New Jersey. A rate above 12 million would be “a good sign and an indication the fourth quarter will be higher,” George Pipas, Ford’s sales analyst, said yesterday in an interview.

“We feel pretty good about October for the industry overall and for GM in particular,” Don Johnson, GM’s vice president of U.S. sales, said today on a conference call.

GM today said it will raise as much as $10.6 billion in an initial public offering that will reduce the U.S. and Canadian governments’ stakes in the automaker. The company also said it had third-quarter net income attributable to common stockholders of $1.9 billion to $2.1 billion.

Toyota’s U.S. deliveries fell 4.4 percent, the only drop among the top six automakers. The decline was smaller than the 5.6 percent drop estimated by four analysts, on average. Sales of the Corolla decreased 25 percent and the Camry slipped 14 percent.

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GM’s Sticker: $50 Billion

The United States will cut its ownership stake in General Motors Co. below the symbolically important 50 percent to about 35 percent when the carmaker relists its stock later this month, according to new figures the company plans to disclose Tuesday, but it will be tough for the government to break even on its investment, reported The Wall Street Journal.

The new projections by GM say the company could have a stock-market value at the start of trading of $50 billion—about the same as the solidly profitable Ford Motor Co.—and that it could be as high as $60 billion, said people familiar with the plan.

But for the U.S. to break even through sales of the rest of its stake, the share price may need to rise more than 60% from its initial level, to about $50.

The initial public offering plan envisions the shares would be priced at $26 to $29 each, these people said. The actual price of the stock to be sold in the IPO would be set about Nov. 17, and the sale would take place the following day.

Through the IPO, GM plans to sell 24% of its total shares, or about $10 billion worth, based on the midrange of the share-price estimate.

The shares to be sold are owned by the U.S. Treasury, a union-run trust and Canadian federal and provincial governments, said the people familiar with the plan.

Under the plan, the Treasury would sell $7 billion of its shares, paring its 61 percent stake to about 35 percent—lower than many observers expected. The United Auto Workers trust, which pays for retiree health care, would sell $2 billion of its shares, while Canada and Ontario would offload around $1 billion of their shares.

The plan includes a stock split that will triple the number of GM common shares available to 1.5 billion. Outstanding warrants—the right to buy shares— boost the total to 1.8 billion.

Details of the stock offering are expected to be filed with the Securities and Exchange Commission on Tuesday, in advance of a “road show” GM is set to launch Wednesday to promote the IPO to prospective investors.

Some details of the sale were earlier reported by Reuters.

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GM Said to Seek $10.6 Billion in IPO to Help Repay Treasury

General Motors Co. aims to raise as much as $10.6 billion in an initial public offering that will reduce the U.S. and Canadian governments’ stakes in the largest U.S. carmaker, two people familiar with the plan told Bloomberg.

GM, 61 percent owned by the U.S. Treasury Department, will offer 365 million shares at $26 to $29 each, according to the people, who asked not to be identified because the plans are private. The automaker also will offer $2 billion to $3 billion of preferred shares that later will become common stock, said the people.

CEO Dan Akerson is working toward returning the $50 billion GM received in a taxpayer bailout last year. The Treasury, seeking to win higher prices in future offerings, is selling less than the $12 billion to $16 billion that people familiar with the situation said Detroit-based GM and its investment banks had considered earlier.

“This makes sense,” George Magliano, a senior economist for IHS Automotive who is based in New York, said in an interview yesterday. “They need to protect the price of the offering. The IPO was never intended to buy out all of the government and union stakes in one fell swoop. It’s got to be done over time, and you need to get the right price.”

An amended registration statement that contains the number of shares and the price range for the offering will be filed with the Securities and Exchange Commission as soon as today, an election day in the U.S., one of the people said.

For the United States to break even, it needs to sell at an average price, before splits, of $131 a share, a person familiar with the matter told Bloomberg in September.

With a 3-for-1 split, the stock would need to rise to almost $43.67 a share — almost 60 percent more than the midpoint of the planned offering — to reach the breakeven point, said a person familiar with the planning.

The suggested offering price would value GM at three times Ebitda, or earnings before interest, taxes, depreciation and amortization, while Ford Motor Co. trades at five times that measure, said the person. The discount should ensure the offering is over-subscribed and may lead to a jump in the price when trading begins Nov. 18, the person said.

Bonds issued by GM’s bankrupt predecessor dropped. The 8.375 percent bonds due July 2033, which were issued by old General Motors Corp. and convert to shares in the new GM, fell 3.5 cents to 33.5 cents on the dollar at 9:43 a.m. in New York, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.

GM’s offering range values the company at about $50 billion to $60 billion, Guy LeBas, chief fixed-income strategist and economist at Janney Montgomery Scott LLC, wrote today in a note.

The U.S. Treasury will likely sell about $7 billion of stock, one of the people said. About $2 billion of shares will be sold by the United Auto Workers retiree health-care trust, and less than $1 billion may be sold by Canada, one of the people said.

The medical trust’s sale would be worth about 25 percent of its stake, while Canada will sell about 20 percent of its shares, one of the people said.

The offering may price on Nov. 17 and the shares would begin trading the following day, the person said. A roadshow in which GM will pitch investors in North America and Europe will begin tomorrow or Nov. 4, the person said.

Noreen Pratscher, a spokeswoman for GM, didn’t respond to a telephone message seeking comment.

“It’s all up to the company” when it files with the SEC and begins its roadshow, said Steven Adamske, a spokesman for the Treasury department.

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Big Moves Ahead for GM

General Motors Co. will take major strides in the coming days in its 16-month march from bankruptcy to the New York Stock Exchange, reported The Detroit News.

Over the next week to 10 days, GM is expected to take three big steps: release third-quarter earnings, set a price range for its initial public stock offering, and embark on a global marketing push to court investors.

GM’s underwriters and the U.S. Treasury Department, which is the company’s majority owner, may announce as early as Monday how many shares the government intends to sell in the IPO, as well as set a starting price range, The Detroit News has learned. A final share price will be set shortly before the company goes public with its stock, which is expected in mid-November.

The United Auto Workers’ health care trust fund, which holds a 17.5 percent stake, also is expected to sell some of its shares, as are the Canadian and Ontario governments, which own 11.7 percent of GM, a source has told The Detroit News.

The automaker also expects to post its third consecutive quarterly profit this week or early next, building upon a $2.2 billion profit in the first half of the year — showing “significant” results, a person briefed on the matter said.

Auto sales are looking up. GM and other automakers report U.S. sales for October on Wednesday with analysts predicting it could hit a seasonally adjusted annual rate of 12 million.

The gradual rebound of the market is good news for GM, which also working to improve its image. Consumer Reports recently moved the automaker up in its reliability rankings and some GM brands have successfully stolen market share away from rivals.

“We are getting reward for it in the market place, not only in terms of popularity but price,” CEO Daniel Akerson told reporters Friday. “We’re very pleased with our position, right now.”

A loss is expected for the Treasury in the initial sale, but the IPO will represent a major step for GM in ending the government’s 61 percent ownership stake in the automaker. If the stock value increases, the government could make money in subsequent sales. In all, the Treasury owns 304 million of GM’s 500 million common shares.

GM officials are barred from speaking publicly about the IPO because of federal regulations, but the company already has laid the ground work for its investor pitch.

Last week, it announced it was paying down $11 billion in debt and pension liabilities, attempting to clean up its balance sheet. The company also has made news through a series of announcements touting new jobs, additions to its vehicle line up and big multimillion investments in its plants.

GM’s stock will trade on the NYSE and the Toronto Stock Exchange, the company said in August.

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Ford Stock Rally Could Be Boon to GM IPO

Ford Motor Co.’s emergence as Detroit’s darling may have fueled jealousy at General Motors Co. headquarters, but the archrival’s rising shares could help GM as it readies its landmark return to public markets, Reuters reported.

As GM’s only major U.S.-listed rival, Ford is the company investors and bankers are turning to as they debate the largest U.S. automaker’s theoretical value ahead of the high stakes IPO scheduled for soon after next week’s U.S. mid-term elections.

There are several ways to calculate value for GM, including using a multiple of its projected cash flow based on Ford’s multiples, or doing an implied value calculation based on where GM bonds are trading.

Initially, GM’s IPO — just over a year after the automaker’s bankruptcy — was widely expected to weigh on Ford’s shares, which have appreciated sharply since hitting a record $1.02 low in November 2008 and were trading around $12 when news of GM’s stock float first began to circulate in May.

Ford executives were repeatedly asked to assess the risk that mutual funds and other institutional shareholders might “rebalance” their portfolios, dumping Ford stock and buying GM.

“Just mathematically, a lot of mutual funds and other investment entities will probably spread their investment out over the sector more,” Ford Executive Chairman Bill Ford told reporters in August, two days after GM filed the initial paperwork for its IPO with the U.S. Securities and Exchange Commission.

Whether GM benefits — and Ford suffers — from investors diversifying their autos holdings will not be determined until after GM’s debut in mid-November. But in the meantime, Ford’s share rally and a broad rebound in auto industry stocks across the board are helping GM’s valuation.

Ford, which posted losses totaling $30 billion from 2006 through 2008, has emerged as the strongest of Detroit’s “Big 3” automakers under a turnaround plan led by CEO Alan Mulally.

Its stock hit a six-month high of $14.47 on Tuesday when it impressed investors with a $1.7 billion profit for the third quarter.

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Auto Czar Praises GM, Chrysler Progress

WASHINGTON – The Obama administration’s top auto adviser today offered an optimistic outlook for taxpayers, anticipating the government would lose less than previously predicted on the $85 billion auto industry bailout, reported The Detroit News.

Weeks before General Motors Co. is set to launch a public offering, auto czar Ron Bloom strongly defended the government’s rescue of the auto industry.

The bailout of GM, Chrysler Group LLC and auto finance companies will be “at a cost that will almost certainly be a small faction of even the most optimistic predictions,” Bloom told an audience at George Washington University Law School today.

Earlier this month, the Treasury Department narrowed its predicted loss on the bailout to $17 billion, down from an initial projected loss of $44 billion in 2009. Bloom didn’t specify how he much he thought taxpayers might lose.

He praised the efforts that GM and Chrysler have made to date.

“The talented and energetic directors and management teams at GM and Chrysler in full partnership with the UAW have already made a huge amount of progress,” Bloom said.

Bloom, who is overseeing the government’s 61 percent stake in GM and will help decide how much the government will offer for sale, didn’t comment on the IPO.

Bloom, a former investment banker and adviser to the United Steelworkers union, offered an unstinting defense of the government’s auto bailout, saying the administration “had accomplished everything we set out to do.”

He said GM and Chrysler – and their unions – shared in the blame for the automakers’ near collapse in 2008.

“The companies and their unions cannot be absolved of all responsibility for their part in this great American tragedy,” Bloom said. “The companies allowed themselves to be lulled into a false sense of security and the unions went along for the ride,” he said.

Bloom said both sides weren’t facing the problems in the runup to the companies’ requests for bailouts.

“Neither party was willing to face the seismic economic shifts that were occurring all around them,” Bloom said.

But he said what finally turned around Detroit automakers was the threat of collapse.

“As Samuel Johnson famously said ‘Nothing focuses the mind like an imminent hanging.’ And GM and Chrysler could clearly see the noose,” Bloom said.

Bloom noted the auto rescue’s intense unpopularity – “everybody still thinks it was a bad idea” – but said they had saved GM and Chrysler because it was right.

“Over time – knock wood – people will appreciate that GM and Chrysler have in fact fundamentally changed and we’ve saved a million jobs,” Bloom said. “This will be recorded as an important moment when the government did the right thing.”

He also explained why he thought Ford Motor Co. didn’t need a federal bailout. He noted that Ford had borrowed $23.4 billion in late 2006 to guard against a rainy day – a move he partially attributed to good luck.

He said if GM and Chrysler had failed it would have forced Ford into bankruptcy because of the collapse of the supply base that all three companies use.

He said Ford is still doing better than its domestic rivals.

“(Ford) is a little bit further along. They got the memo a little sooner. They did have some luck. They’ve had a huge amount of hard work and they did it in the best way imaginable benefitting from what we did,” Bloom said, calling Ford “a spectacular company.”

In the end, the administration didn’t just save two auto companies – but a whole sector of the economy.

“The reality is we saved the automobile industry – and everbody who’s connected to that industry benefitted,” Bloom said.

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