General Motors (GM) has reclaimed its position as the largest automaker in the world after a structured bankruptcy in 2009 that included a government bailout. While it enjoys a position at the top once again, Ford Motors (F) is quickly chasing it in the United States and is closing the gap quickly while Toyota Motors (TM) is still recovering from the implications of the tsunami and resulting nuclear disaster in Japan. China will play a pivotal role in the growth of General Motors and is allowing the company to increase its global influence while it is still being challenged for supremacy in the United States.
General Motors has sold roughly 378,000 vehicles in the first two months of this year. This was a 2.2% decline from its sales at this point only a year ago. In comparison, Ford has sold 315,000 vehicles for an increase of 11.2% as it chases General Motors for the top position. Toyota Motors showed growth as well, selling 284,000 vehicles in the first two months of the year for a gain of 10.2%. In my opinion, General Motors may have lost traction in the first two months of the year, but it is positioning itself to accelerate through the rest of the year.
In February alone, General Motors sold over 240,000 cars in China, which is a rapidly emerging market. Its February sales shattered its previous records in China and painted a picture of things to come. All three of its key joint ventures broke sales records and posted significant increases. Shanghai GM sold 103,000 vehicles, which was an increase of 31.8% while SAIC-GM-Wuling similarly reported gains of 28.7% with over 130,000 vehicles sold. FAW-GM sold an additional 7,000 vehicles for a gain of nearly 40% and General Motors is looking to sell over 1.1 million vehicles this year primarily because of the rise of the Chinese automotive market.
Despite an overall decline of 2.2% in sales compared to last year, all of General Motors' sales figures in China are looking incredibly optimistic. Chevrolet sales were up to over 52,000 for an increase of 23.7% with the Cruze leading the way with almost 21,000 sold. Buick sales rose to almost 53,000 for a gain of 31.1%. The demand for Excelle vehicles rose over 70% and contributed to almost 12,000 of Buick's car sales. Cadillac was up by 6.6% and set a record for sales in China at over 2,000.
In the United States, General Motors is being threatened by Ford's electric Focus and Fusion Hybrid vehicles, which have produced such a heavy demand that Ford has opened up another production plant in order to anticipate the rise in sales. Toyota is recovering as well and is operating off of its established reputation for producing fuel efficient vehicles in a time when gas prices are rapidly rising. Its growth in China is quickly becoming the path to ensuring that General Motors maintains its position as the leading automaker in the world as Ford and Toyota chisel away at the market share in North America.
General Motors is putting pressure on Ford's truck division with the sale of over 240,000 trucks in China. Ford has always led the market in light truck production and has sold 206,000 trucks in the first two months of the year, which puts General Motors in the lead for the year for light truck sales. Ford remains the leader for heavy duty trucks, but General Motors is beginning to present a serious challenge to Ford's truck sales as time goes by.
What will ultimately benefit both companies is the dedication each one has exhibited to the production of more fuel-efficient vehicles, which has allowed Ford and General Motors to compete with Toyota and keep the Japanese automaker in third place for the last two years. Innovations in engine technology and hybrid and electric vehicles will give the competitive advantage to Ford and General Motors with consumers who prefer domestic vehicles in the United States but are also looking for vehicles that will address the rising cost of gas. The Chevrolet Volt is General Motors' premier offering to those who value fuel efficiency and has the ability to run completely on electricity or switch to gas in the event of battery drainage.
Three years ago, General Motors traded at $34 per share and plummeted in 2010 to as low as $19 per share. The news of its success in China coupled with its recent gains back to $26 per share are what I believe will contribute to a steady run over the next three years as the company continues its remarkable recovery from its state of affairs only three years ago. Total light automobile sales were up to 1.1 million for the month of February, and General Motors contributed over 24% to the total, which makes it the dominant player in the market despite the advances its competitors are making. I believe that the market will respond accordingly and General Motors will have a great year in 2012 and in the next several years as it regains its composure in the United States.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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