Time to Invest in GM?

TIME TO
INVEST IN
GM?
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/profitable-investing-tips/time-to-invest-in-gm
General Motors was once the
largest corporation in the world and
the king of U.S. auto makers.

Foreign competition ate away at its
customer base and profits and the
financial crisis dealt the final blow.

In 2009 the once-king of U.S.
automakers filed for Chapter 11
bankruptcy protection with
US$172.81 billion in debts and
US$82.29 billion in assets.

The company divested itself of
numerous assets keeping the
Chevrolet, Cadillac, GMC, and Buick
brands as well as controlling
interests in numerous foreign
automobile operations.

After reorganization, the new GM
emerged in a $20.6 Billion IPO in
November of 2010.

Any money invested in the new GM
at the time of its IPO has doubled,
counting dividends and stock
appreciation.

All of this having been said, is it
time to invest in GM for the long
term?

Is It Time to Invest in GM?

Simply based on its dividend of
3.9% and a share price that is just
6.1 times its projected earnings, GM
looks attractive.

This may well be why Warren
Buffett increased the Berkshire
Hathaway stake in GM to 37% and
now holds 5.1% of GM shares.

However, projected earnings that
are the big question for all
automakers these days.

The industry is undergoing
fundamental changes and only
those automakers that adapt,
innovate, and work with maximum
efficiency will survive and prosper.

If you believe that GM will lead the
group of survivors, then you believe
that it is time to invest in GM.

The factors that we see affecting
the auto industry all derive from
new technologies and the effects of
these technologies on how we live,
communicate, work, buy services,
own cars (or not), and drive (or not).

Electric Cars

The leader in the field of
commercially producing and selling
electric cars has been Tesla.

Tesla was founded in 2003 and after
ten years of making electric cars
was the best-selling manufacturer
of plug-in electric passenger cars
by 2018.

They have delivered almost a
quarter of a million electric vehicles
and have a market share of 12%.

Many in the auto industry see the
electric car or electric-gasoline
hybrids as the future of the auto
industry.

And GM has been selling electric
cars as well and is catching up to
Tesla.

According to Investor’s Business
Daily, as if January of 2019 GM
joins Tesla in the top tier of electric
car sales, having sold more than
200,000 electric vehicles at which
level the Federal Electric Vehicle
Tax Credit starts to reduce. (Tesla
passed this milestone in July of
2018.)

Tesla Electric Car

The issue with Tesla for years has
been a huge amount of debt and not
enough sales to show a profit.

One of the factors that have
supported Tesla has been the
$7,500 tax credit for those who
purchase electric cars.

As the tax credit goes down, Tesla
is having to sell their cars for less
to make them competitive and this
cuts into their attempts to make a
profit.

In the electric car arena, GM needs
to produce good cars to compete
with and beat the likes of Tesla and
do so at a profit.

Those who believe that it is time to
invest in GM also believe that GM
can do this.

Chevy Cruze Electric Car

Self-Driving Cars

This may be a much smaller niche
in the near term, but as computer
technology and artificial
intelligence advance, we may come
to a point where all cars offer the
option of letting the car drive itself.

Seeking Alpha looks at the self-
driving unit at GM and says it could
be valued at more than the rest of
the company combined.

The writer predicts a world-wide
autonomous car market of $7
Trillion by the middle of the century!

More information and detail about
the autonomous vehicle market can
be found at Allied Market Research.

Autonomous Vehicle Market by
Level of Automation (Level 3, Level
4, and Level 5) and Component
(Hardware, Software, and Service)
and Application (Civil, Robo Taxi,
Self-driving Bus, Ride Share, Self-
driving Truck, and Ride Hail) –
Global Opportunity Analysis and
Industry Forecast, 2019-2026

As the complicated introduction
indicates, there are a lot of players
involved and a lot of pieces to this
puzzle from the level of automation
of the vehicle to the type of vehicle
and how it will be used.

An autonomous vehicle also known
as a self-driving vehicle uses
artificial intelligence (AI) software,
light detection & ranging (LiDAR),
and RADAR sensing technology,
which is further used to monitor a
60-meter range around the car and
to form an active 3D map of the
current environment.

The vehicle is designed to travel
between destinations without a
human operator.

To accomplish this goal, the auto
used LiDAR, RADAR sensors, and
sophisticated computer software.

Developing each subsystem and
integrating all of it is a complicated
task and must be carried out with
maximum efficiency in order for a
company to make a profit!

A lot of major automakers are
working on this technology as are
auto suppliers, technology
providers and even service
providers.

Automakers include General
Motors, Daimler AG, Ford Motor
Company., Volkswagen Group,
BMW AG, Renault-Nissan-
Mitsubishi alliance, Volvo-Autoliv-
Ericsson-Zenuity alliance, Groupe
SA, AB Volvo, Toyota Motor
Corporation, and Tesla Inc.

Technology companies include
Waymo, NVDIA Corporation, Intel
Corporation, Baidu, and Samsung.

Additional companies are Robert
Bosch GMBH, Aptiv, Continental
AG, Denso Corporation, Uber, Lyft
and Didi Chuxing.

That is a lot of folks to keep track
of.

The consensus of experts is that
Waymo is the technology leader in
this field followed by GM.

Waymo, by the way, is a subsidiary
of Alphabet (Google)!

The short version is that GM is one
of the two leaders in work to
developing, market and sell self-
driving autonomous vehicles.

If you see GM as successful in this
quest, it is time to invest in GM!

Waymo Self-driving Car

Who Is Going to Own Cars in
the Future?

A factor to consider when investing
in any automaker is that more and
more people cannot afford to buy or
least a car.

And many of these folks live in
large cities where public
transportation is an option.

These folks can rent a car by the
day or even by the hour when they
really want or need an automobile.

This may well reduce the overall
demand for vehicles and put more
cars into the hands of rental
agencies and the likes of Uber.

The ability of downsize as needed
and the ability to sell to a global
sales network will be important for
future auto industry success.

Who Will Sell Cars in Asia?

Access for foreign markets will also
be important to the success of
automakers of the future.

Despite the threat of a trade war
and bullying from the current U.S.
president, GM is likely to stay in
China where its profit margins are
better than in North America and
where it and its partner have a
decent market share.

If you believe that GM is wisely
staying where the business is, then
it is tie to invest in GM.

The concern about GM in China is
not GM but China.

The Land of Managed Capitalism
has a bunch of problems, not the
least of which is the trade war with
the USA.

Nevertheless, Asia is a grown area
while North America and Europe are
mature markets.

A company that is smart enough to
reduce production capacity where it
is selling fewer cars and beefing it
up where sales are still healthy is a
good bet. Maybe it is time to invest
in GM.

Time to Invest in GM?

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Time to Invest in GM?