GM's 2012 Performance Slips Amid European Woes and Lower Market Share

General Motors' (GM) earnings and market share were down in 2012 despite a better year for car sales in the U.S., a combination that soured Wall Street on the automaker's fourth quarter and year-end earnings report.

GM reported $4.7 billion in earnings for 2012, a sharp decline of 36 percent from the $7.6 billion it posted a year ago. The automaker's finances are on solid ground after its 2009 tax-payer assisted bankruptcy, but it underperformed a bit in the U.S., struggled in Europe amidst recession across the Atlantic and had a few special-item charges, all of which disappointed Wall Street.

General MotorsDespite a 89 percent increase in fourth quarter earnings to $900 million, analysts and investors were especially disappointed with GM's performance in the final reporting period. They had forecast earnings of 51 cents a share, while the automaker's earnings came in at 48 cents a share. GM shares were down in down in pre-market trading and are expected to close lower today. GM's revenue was up slightly to $152.3 billion.

"We recorded another solid year in 2012 as we grew the business, delivered a third straight year of profitability and took significant actions to put the company on a solid path for future growth," said Dan Akerson, chairman and CEO. "This year our priorities will be executing flawless new vehicle launches, controlling costs and delivering more vehicles to our customers at outstanding value."

GM announced that it will issue profit-sharing checks of up to $6,750 to its 49,000 hourly U.S. workers. The payments, which are based on the company's performance in North America, are about $250 less than the GM's previous profit sharing checks.

Operating profit, a key indicator of how GM is doing, improved 14 percent to $1.25 billion for the fourth quarter and fell 5 percent to $7.9 billion for the full year.

The automaker's pre-tax loss in Europe grew by 24 percent from a year earlier to $699 billion. The loss equaled 12.5 percent of GM Europe's sales for the quarter, worse than 9 percent a year earlier. Its yearly loss in Europe more than doubled to $1.8 billion.

Worrisome to GM is its falling market share. GM's U.S. share fell from 19.2 percent in 2011 to 17.5 percent in 2012. It slipped from 18 percent in the fourth quarter of 2011 to 17.1 percent in the fourth quarter of 2012. Globally, GM gave up world sales leadership back to Toyota.

So what is ahead for GM in 2013? It has an important launch of an all-new Chevy Silverado and GMC Sierra pick-up trucks. With construction in the U.S. improving, that is a big opportunity for GM to earn big money with an all-new truck. The redesigned Chevrolet Impala will be released this quarter, the Buick Encore compact crossover recently hit the market and a redesigned Cadillac CTS will be released in the fall. The company is also amidst an emergency design fix of the Chevy Malibu mid-sized sedan, a car that critics have skewered for shortcomings while Ford, Honda and Nissan have all received laurels for the redesigns of their sedans this year.

GM management has been anxious for the government to sell off its stake in GM that resulted from the tax-payer bailout in 2009. President Obama has indicated that the Treasury will begin selling off its stake, with the likelihood to be out of GM by early 2014.

Barclays analyst Brian Johnson says that 2013 will be a challenging year for GM, but that "a sweet spot" may exist for GM in 2014 when it is free of government ownership and several important new products are new.

GM shares were trading flat after the open between $28 and $29 a share, well above its 52-week low of $18.72, but shy of its 52-week high of $30.68.

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Oh yes !! Can you see another union bail-out coming ??

February 19 2013 at 9:01 AM Report abuse rate up rate down Reply
David Ferraez

David Kiley
Why isn't the title of your article........."Gm earns the 2nd most profit in its 100 year history".............or something like that???????????? The media does more damage to this country with negative news..........even with positive information than the corrupt congress does..........of course both are damaging to our country. You seem to take pride in negative news............."consistant damage to your country".........what a legacy to leave. df

February 15 2013 at 9:05 AM Report abuse -1 rate up rate down Reply

hey mark ....i've worked skilled trades at GM for 28 yrs and i've never made 140000 a yr....if you don't like working there quit and go work and buy one of those asian pieces of crap.......i can kind of see the slanted eyes on you any way.....for sure not AMERICAN!!!!!!!!!!!!!!!

February 14 2013 at 7:47 PM Report abuse rate up rate down Reply
Mark Francis

After working since 1995 for GM (Janesville, WI) and a short time at Chrysler (Belvidere, IL) Dodge Dart. I believe that GM and Chrysler haven\'t learned a thing. Same old management & the same old UAW. Way too much laziness, stupidity, lack of urgency, and ineptness. I would recommend anyone buying a auto to go to an Asian brand. I should let it be known I was an hourly worker, both non-skilled and skilled, during my time in the auto industry. People just shuffled along at the Dodge Dart factory, like there wasn’t a care in the world. 450 or plus, so called skilled trade’s people, at an average of $140,000.00/year in wages, with production down and they still keep trade’s working 7 days a week at double time on Sunday. WHAT A JOKE. I am sure GM and Chrysler will be in bankruptcy again.

February 14 2013 at 7:29 PM Report abuse rate up rate down Reply

The new "Chevrillac" Volt will save the day with high volume sales and large profits, just the way it did for Chevrolet. If you listen closely you can hear the orders stacking up for the re-banded Chevy that no one wants. Oh, and at a $20,000.00 premium. If Washington only bought Toyota stock!

February 14 2013 at 3:54 PM Report abuse -1 rate up rate down Reply