GM has announced it has achieved a record 9.92 million sales during 2014, as well as revealing that it anticipates an improvement in its profitability this year.
IHS Automotive perspective | |
Significance | GM has announced it has achieved a record 9.92 million sales during 2014, a gain of 2.1% y/y, as well as revealing that it anticipates an improvement in its profitability this year. |
Implications | The automaker has ridden on the crest of the rebound in the US and the growth in the Chinese market, although pressures remains in other markets. |
Outlook | IHS Automotive anticipates that during 2015, GM global registrations (excluding SGMW) will fall 0.4% y/y to 7.85 million units despite further gains in China and North America, on some weakness remaining in South America and Europe. We also see SGMW continuing to gain with sales up 7% y/y to 1.93 million units during the year. |
General Motors (GM) has revealed its global sales results for 2014, which have set a new record. During the past 12 months, deliveries have reached 9.92 million units, a gain of 2.1% year on year (y/y). This was helped by a 3.3% y/y gain during the final quarter when sales reached 2.55 million units.
On a regional basis, the gains have come from two key business units worldwide: GM China and GM North America. In the former, sales rose 12.0% y/y to 3.54 million units during the year, making China again its largest single market globally. Its Chevrolet, Buick, Wuling and Baojun brands have all set records, helped by new model launches. In North America, a gain of 5.5% y/y was recorded resulting in sales of 3.41 million units. The gain was supported by a 5.3% y/y increase in the US, its second largest market with 2.94 million units, and Canada, its fifth largest which sold 249,800 units, an increase of 6.3% y/y. According to the company, it has been heavily supported by its recently introduced large pick-ups and sport utility vehicles (SUVs), and where it said it has sold almost 1 million units, some 11% better than 2013.
GM regional sales | ||||
Regional unit | Q4 2014 | Y/Y % change | YTD 2014 | Y/Y % change |
GM North America | 853,629 | 8.8 | 3,412,714 | 5.5 |
GM Europe | 297,813 | -11.3 | 1,256,109 | -9.9 |
GM South America | 235,841 | -11.8 | 878,075 | -15.3 |
GM International | 206,630 | -12.7 | 838,010 | -6.7 |
GM China | 958,840 | 13.1 | 3,539,972 | 12.0 |
Total | 2,552,753 | 3.3 | 9,924,880 | 2.1 |
Source: GM | ||||
However, the situation was less positive elsewhere. At GM Europe, sales have fallen 9.9% y/y to 1.26 million units, largely due to the winding down of Chevrolet's operations in the region to focus on the Opel/Vauxhall brand. Demand has also deteriorated in South America, where sales have tumbled by 15.3% y/y to 878,075 units, not helped by a 10.9% y/y retreat in Brazil to 578,875 units. Finally, GM International - which comprises Asia-Pacific, Africa and the Middle East - has fallen back 6.7% y/y during the year to 838,010 units, with a 12.7% y/y decline in the final quarter to 206,630 units.
On a brand basis, Chevrolet was again by far its largest brand globally, having recorded sales of 4.79 million units despite struggling with a 4.1% y/y decline. Although sales rose in China and the US, the situation was less positive in other markets, including Europe where it is being phased out in many West and Central European markets, and Brazil, where it was a leader in a retreating market. However, gains were recorded by other key brands. This includes its European Opel/Vauxhall brands with a 3.0% y/y improvement, and achieved its highest market share in the region since 2011. Buick recorded an impressive 13.3% y/y increase to 1.17 million units, as sales in both the US and China improved by a similar degree. This was supported by a positive performance of the Encore compact crossover. Cadillac sales rose 5.2% y/y to 263,782 units, driven by a 43% y/y increase in the Chinese market.
In related news, GM's chief executive officer (CEO) Mary Barra, president Dan Ammann, and chief financial officer (CFO) Chuck Stevens have revealed their expectations for an increase in profitability during 2015 to Deutsche Bank 2015 Global Auto Industry Conference in Detroit (US). A statement released by GM says it expects its earnings before interest and tax (EBIT) adjusted and EBIT-adjusted margin to increase, after adjusting 2014 for the impact of recall costs. It also anticipates improved automotive results in all regions. GM also reiterated that it is on track to meet its previously announced 2016 financial targets to achieve EBIT-adjusted margins in North America of 10%; a return to profitability in Europe, and to maintain strong margins in China. It added that this plan puts it on course to achieve a margin of 9–10% by early next decade.
Outlook and implications
GM is the latest global automaker to announce its sales results for 2014, following on from Volkswagen (VW) Group revealing that it had sold over 10.14 million units of passenger cars, light commercial vehicles (LCVs) and medium and heavy commercial vehicles (MHCVs) earlier this week
(see Germany: 13 January 2015: VW achieves Strategy 2018 goal of selling 10 mil. units four years ahead of target). GM's sales gain this year was despite issues related to the recall of millions of vehicles due to a failed ignition switch, some fallout from the Takata airbag recalls and myriad additional GM recalls in 2014 as it sought to get ahead of potential quality issues that might arise. However, it has been able to ride the crest of the wave of improvement recorded in the US market again this year, remaining the market leader (see United States: 6 January 2015: US light-vehicle sales grow 10.8% in December 2014, 5.9% for full year). However, it was hugely dependent on the gains from the Chinese market for this improvement. This includes vehicles built under the Shanghai General Motors Wuling (SGMW) joint venture, including the relatively recently introduced Baojun brand which IHS Automotive does not include as a core unit due to GM's not owning a majority stake. It also faced some declining markets this year, although there are some indications of improvement in Europe, with the minor gain recorded by the Opel/Vauxhall unit and the launch of the Corsa and forthcoming Opel Karl/Vauxhall Viva and Astra later this year. It may well come under further pressure from its operations in Russia, where the local currency has been devalued. IHS Automotive anticipates during 2015, GM global registrations (excluding SGMW) will fall 0.4% y/y to 7.85 million units despite further gains in China and North America, as some weakness remains in South America and Europe. We expect SGMW will continue to rise, with sales up 7% y/y to 1.93 million units during the year.