GM Surpasses Ford in Crucial Statistic.Does This Signal a Smart Investment Opportunity for the Stock?
GM Surpasses Ford in Crucial Statistic.Does This Signal a Smart Investment Opportunity for the Stock?
The automotive sector is witnessing an unprecedented transformation with innovations in self-driving vehicles, vehicle-as-a-service, and the rise of electric vehicles (EVs) replacing their gasoline-powered counterparts.
Regarding one significant indicator, General Motors (GM) managed to surpass Ford Motor Company (F) with a noticeable margin. Let's examine the implications for investors.
What have you been up to lately?
In a broader context, the United States' new light-vehicle market experienced a 12% surge in October, with robust retail growth boosting sales figures. October's sales represented a welcome change for investors, who had largely encountered unfavorable numbers.
For Ford investors, the positive change didn't bring much cheer, as the company's position at No. 2 for EV sales in the U.S. market remained disappointing. In October, Ford sold 6,264 EVs, marking an 8.3% decline compared to the previous year, and 23,509 EVs during the third quarter. The company's performance was nowhere near touching its crosstown rival, General Motors, which reported 32,095 EV sales in the third quarter, a 60% increase compared to the previous year and a 46% leap from the second quarter of 2024.
Rory Harvey, GM's executive vice president and president of global markets, expressed his satisfaction in a press release, stating, "GM's EV portfolio is expanding faster than the market because we provide an all-electric vehicle suitable for everyone, regardless of their preference in vehicles."
The upside for GM investors is that more than half of EV buyers are new to the brand. General Motors is also working diligently to enhance profitability, highlighting that updated internal combustion engine vehicles are more profitable than their predecessors due to efforts to cut prices and simplify options. In fact, in terms of EVs, GM anticipates a reduction in EV-related losses by $2 billion to $4 billion by 2025.
GM's takeover of Ford's second position in EV sales during the third quarter signifies an exclamation point on a strong performance. GM took the lead in U.S. sales, delivering nearly 660,000 vehicles in the third quarter, fueled by nine consecutive quarters of year-over-year retail sales growth. GM expanded its U.S. market share during the third quarter due to favorable pricing, efficient inventory management, and reduced incentives. Its situation in China also improved compared to the second quarter.
What does it all add up to?
General Motors surpassing Ford as the second-best-selling EV manufacturer in the U.S. market serves as the latest indication of the Detroit powerhouse's growing clout, as depicted in the stock chart below.
As of now, General Motors is moving in the right direction, showering shareholders with substantial returns through billions of dollars in share repurchases and dividend payments, offering more profitable vehicles while reducing costs on EVs, and focusing on a driverless future with its Cruise operations.
Also worth noting, despite GM's surge in 2024, the stock continues to trade at an attractive price-to-earnings ratio of 5.8, making it a compelling investment opportunity today. General Motors may have overtaken Ford in more than just EV sales; it may now be the leading Detroit automaker for investors.
In light of the increasing focus on electric vehicles, investors might consider diversifying their portfolios by allocating some funds towards companies that are excelling in this field. Given General Motors' recent success in overtaking Ford in EV sales, it could be an attractive option for those looking to invest in the automotive sector. Additionally, the company's strategic focus on cost reduction and profitable vehicle production, along with its promising driverless future with Cruise operations, makes it an appealing choice in the current financial landscape.