A fantastic week energizes GM for autonomy, growth
If, as popular culture has it, what’s good for General Motors is good for the country, then a recent string of news gems for GM should let the good times roll in the Mahoning Valley and throughout the auto giant’s global marketplace for years to come.
In rapid-fire succession last week, General Motors reported stellar auto sales for May 2013, the prestigious Standard & Poor’s stock-market index announced the return of GM to its hot 100 list of America’s most successful companies and the U.S. government agreed to sell off another 30 million shares in GM that it acquired in its $49.5 billion bailout in 2008.
Collectively, these developments bode well for the company’s speedy return to complete independence from government authority, for its resurgence as an undisputed national and international leader in quality auto and truck making and for its revved-up role as a powerful stimulant in the Mahoning Valley economy.
WHAT A WEEK IT WAS
GM’s stellar week began last Monday, when the No. 2 global automaker reported its highest sales month in May 2013 since September 2008. The company sold 252,894 vehicles last month, topping Detroit’s big-three automakers.
In the Valley, the Lordstown-built Chevrolet Cruze celebrated its best May sales month since its introduction in 2010. Cruze sales totaled 23,055 units, a 17.5 percent year-over-year increase. As a result, we join in singing the praises of UAW Local 1112 President Glenn Johnson about the big-selling little car: “Obviously people are buying our product and showing more confidence in it. They’re spreading the word, people are buying it, they’re liking it and telling friends and neighbors what a great car it is.”
As long as it remains so, the sprawling 6 million square-foot plant in Lordstown and its 4,500 workers will continue to jack up prosperity for the Valley economy. And there’s no reason to believe the trend lines will droop anytime soon.
BACK ON S&P TRACK
The strong sales reports also translate into greater prosperity and a stronger public image. Shortly after the May sales data were released last week, Standard and Poor’s welcomed GM back to the fold of the S&P 100 and 500, positions it had lost since its bankruptcy filing in 2009 That restoration has been a long-standing goal of GM Chief Executive Dan Akerson.
The significance of its place on the S&P cannot be underestimated because it likely will prompt stronger demand for its already reinvigorated stock. Companies often realize increased stock prices when added to the S&P, in part because some funds that track the index, particularly mutual funds, are required to hold the stock.
The S&P decision also extended the chain reaction of positive GM news. Last Wednesday, the U.S. Treasury Department announced the sale of 30 million GM shares plus another 20 million owned by a United Auto Workers retiree health care trust in a public offering.
The public offering will speed up the government’s exit from owning GM stock. Some analysts say the government could divest itself of its remaining shares by year’s end. And as it does, the company also will shed itself of its disdainful “Government Motors” moniker that many analysts say has cost it sales.
Today, however, sales look hotter than they’ve been since GM left bankruptcy. The company is exuding in confidence it has not seen in years and is passing that optimism onto consumers. Late last week, the company announced a new incentive — free maintenance for two years or 24,000 miles for all of its 2014 Chevrolet, Buick and GMC models.
That tactical move and other ongoing innovation should strengthen GM’s bottom line and competitive edge. They should also work to portend many more weeks, months and years of good news for the automaker.