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Although global automakers appeared to have struggled to keep up their sales due to the pandemic, industry giants, such as General Motors and Ford Motor Company, performed well compared to their peers. Stocks of GM and Ford saw long rallies this week in US markets. Here are some insights into what these companies may have been doing while the world was in various stages of lockdown.
General Motors (NYSE: GM)
With robust sales volumes in China, ramped up production in high-end vehicles, accelerated technology shifts toward electric vehicles, and brand acceptance in the global markets have made GM stocks attractive, especially when the automaker is seen prepared to take on new challenges.
As the global economy rebounds, new opportunities are likely to open up for the company, already with a staggering market cap of nearly USD 80 billion, one of the factors contributing to the latest rallies. Its stocks were traded at USD 55.86 per share on January 20, 2021.
GM had sold 2.9 million vehicles in China in 2020, helping to boost its fourth-quarter growth by over 14 percent. The increased sales of SUVs, MPVs, and luxury vehicles in the late second and third quarters helped streamline its earnings on a firm footing. Its sales growth is expected to continue in 2021.
The company had announced earnings of USD 4.0 billion and EBITA of USD 5.3 billion in the third quarter ending Sep 30, 2020, while the diluted earnings per common share were USD 4.005. In the nine months ended Sep 30, 2020, its net sales and revenue from automotive were USD 74,576.
Besides, the company’s EV line-up would benefit immensely from Biden’s support for green technologies, in terms of tax rebates and sops, as they are rolled out later in the year. GM has accelerated the development of zero-emission NEVs, whose sales had grown four-fold in 2020 from a year earlier. This positive outlook has driven more investors towards the company.
Furthermore, GM has upgraded its EV battery technology with the launch of the Ultium platform, which will power the next-generation high-performance electric vehicles. On January 19, 2021, GM and Cruise announced their partnership with Microsoft for software and hardware development to expedite the operationalization of self-driving vehicles.
Ford Motor Company (NYSE: F)
With a market cap of around USD 44 billion, the Ford Motor Company is another heavyweight in the global auto industry. Riding high on sales volumes in the Chinese and European markets, Ford had posted a robust Q3 EBT growth of USD 1.1 billion, up by USD 387 million, highest since Q2 in 2005. Ford’s mixed portfolio of commercial, luxury, and small cars has helped maintain its global sales.
For instance, it sold 83,200 commercial vehicle units in the fourth quarter, up by 31.4 percent, while the full-year sales volume was 271,200 units, an increase of 15.4 percent compared to the figure in 2019. This significant performance would be hard to ignore, and perhaps, one of the reasons that Ford stocks may have been in the spotlight this week. On Jan 20, 2021, each stock was priced at USD 56.23, and the total volume of sales was more than 47 million. The EPS, however, stood at USD -0.18.
In China, its sales grew by 30.3 percent in the fourth quarter, a consecutive Year-Over-Year quarter growth. Despite the pandemic, the company sold 602,627 vehicles in China in 2020, up by 6.1 percent year-over-year. In Europe, it sold 974,982 units, with a market share of 7.1 percent, or 0.3 percent down, compared to the previous year.