General Motors: The New Hip Automaker?

In the past, no one would have confused General Motors for a hip automaker, but now the company is making a big bet on technology to increase its "coolness" factor. GM recently announced plans to team up with AT&T to add 4G LTE connectivity into most models available in 2014.

What does this mean for consumers? Come 2014, you'll be able to do things like stream a Netflix movie in the back seat, pull real-time traffic information directly to navigation systems, and use mobile devices through the vehicle's Wi-Fi hotspots. 

In the following video, analyst Brendan Byrnes further breaks down what these features mean for consumers, and how GM investors should view this move.


A transcript follows the video.

Taking a big-picture look, it's true that decades of mismanagement of General Motors led to a painful bankruptcy in 2009, but it emerged a leaner, stronger company. GM's turnaround, however, is still a work in progress. Investors around the world are wondering if GM has what it takes to reclaim its former glory. John Rosevear has put together a brand-new premium research report telling you what you need to know about GM and its turnaround. If you own or are thinking about buying shares of GM, then you don't want to miss this report. Click here now to get started.

Andrew Tonner: Hi, Fools. Andrew Tonner here. I'm joined today by our Motley Fool analyst Brendan Byrnes.

Brendan, one of the emerging trends you've seen driving the auto market is increased integration of technology. We saw an example of that with GM teaming up with AT&T. When you look at this deal, what strikes you?

Brendan Byrnes: I think GM is really doing a good job trying to get out ahead of the curve here. They're going to put 4G connectivity in most of their cars, they say by 2014. What you'll be able to do is stream videos in the back seat, have hot spots to connect different mobile devices within the car.

I think this is definitely a good idea for GM overall, especially when you look toward a younger generation of buyers coming up. Ford, of course, has teamed up with Microsoft with their SYNC system.

I like GM's strategy better here -- 4G connectivity obviously is the future, about 10 times as fast as 3G, and they give you the option to team up multiple devices in these cars. As I mentioned, younger buyers are a key.

We know fewer younger people are buying cars nowadays. Even fewer younger people are getting their licenses nowadays.

GM, of course, is not traditionally viewed as necessarily the most hip of all automakers. Maybe they can come back in and be more attractive to these younger buyers that are going to be their core customers as they work their way up into their 30s, 40s, and 50s. I definitely think it's a good idea from that.

Obviously, just getting more and more technology into cars makes them more attractive overall, but I like GM's strategy here a little bit better than Ford.

When we're talking about these stocks overall, a little run-up over the past six months -- actually over the past month they've come down just a slight bit -- I do still think these are long-term, solid investments for your portfolio.

They remain trading, both of them, under 10 times earnings, both the big domestic automakers. That's the main reason I like them better than the Japanese players -- Honda, Toyota, Nissan -- just because they're a little bit cheaper.

Overall, I like what GM's doing here and, again, I think for a long-term investor it's definitely an attractive stock. 

The article General Motors: The New Hip Automaker? originally appeared on Fool.com.

Andrew Tonner owns shares of Ford. Brendan Byrnes owns shares of Ford and General Motors. The Motley Fool recommends Ford, General Motors, and Netflix and owns shares of Ford, Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Add a Comment

*0 / 3000 Character Maximum