GM isn't done pruning

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Thread: GM isn't done pruning

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    YEH
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    GM isn't done pruning

    http://www.autonews.com/article/2017...t-done-pruning

    March 13, 2017 @ 12:01 am
    Nick Bunkley

    International markets and North American cars could be targets

    After pulling the trigger on a sale of its European operations, General Motors signaled that it's willing to cut off more vestigial corners of its business in a decidedly unsentimental drive to improve its profit margins and stock price.

    CEO Mary Barra made clear last week that the Opel deal is not the end of the automaker's effort to pare its portfolio, though other moves under consideration are unlikely to have the sweeping impact of effectively abandoning one of the world's largest and most mature markets.

    "There's a little bit more work that we're doing in the international markets," Barra told reporters on a conference call from Paris, after announcing Opel's sale to PSA Group of France in a deal that shrinks GM's global volume by 12 percent. "Our overall philosophy is that every country, every market segment has to earn its cost of capital."



    In addition to funneling resources into higher-margin plays, GM is heavily focused on returning capital to shareholders. The Opel sale, by reducing the company's target cash balance to $18 billion from $20 billion, frees up $2 billion that executives plan to use to accelerate share buybacks.

    "That's an immediate opportunity for us to reward shareholders without changing the risk profile of the company or our ability to manage through a downturn," CFO Chuck Stevens said.

    While I don't really take issue w/ pruning the weaker parts of GM's business in order to have greater capital to re-invest in the areas where GM sees the potential for growth and/or stronger margins, I do have concerns about paring too much in order to appease activist shareholders.

    A few years before the financial meltdown of 2007-8, large shareholders pushed GM into a share buy-back which depleted GM's cash reserves and hastened GM's demise into bankruptcy (and w/ the credit markets having been frozen, into the arms of the lender of last resort - the Federal govt.).
    Last edited by YEH; 03-13-2017 at 12:02 AM.

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    Re: GM isn't done pruning

    Does this infer that perhaps a US Brand is getting dumped, because I'm at a loss to think of what else they have to cast off over there.


    Maybe the incessant vaguery of Buick's role is about to face stronger definition?

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    Re: GM isn't done pruning

    When the BK happened, and in discussions afterward, the talk of the possibility of as hostile takeover came up now and then. Could GM be trying to prevent this with their latest moves??

    Just something that has been bouncing around in my head. Wescoent used to talk about it some, and that he could see that being a possibility.
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    Re: GM isn't done pruning

    I'm thinking possibly Holden is next to go. Can't see it doing *anything* with it's portfolio any time soon. TBH nobody believes the Camaro to be anything more than a pipe dream till it lands and even then it's hardly going to be a game changer for Holden overall. The Colorado is about the only glimmer of light and whilst solid it's hardly setting the sales charts alight.

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    Re: GM isn't done pruning

    they might as well kill Buick

    Now its donor brand is being let go its one less badge they have to worry about
    Who the hell approved this abomination? Hidden Content

    I bet it was some dumbarse in Detroit Hidden Content

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    Re: GM isn't done pruning

    Does that mean Holden has a glimmer of hope that GM will offload them ?
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    Re: GM isn't done pruning

    Quote Originally Posted by VS Ute 5Litre View Post
    they might as well kill Buick

    Now its donor brand is being let go its one less badge they have to worry about
    There's no way that will happen. They have the CUV triplets with probably one more on the way. Buick is down to one Sedan and a hot hatchback/wagon in MY18. I don't think Buick is as dependent on Opal as you may think.

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    Re: GM isn't done pruning

    Quote Originally Posted by isszy View Post
    Does that mean Holden has a glimmer of hope that GM will offload them ?
    Not at all.

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    Re: GM isn't done pruning

    I am guessing Holden is next too.
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    Re: GM isn't done pruning

    My old finance professor* said that if a company is using its cash to buy back stock that should (theoretically) be worrisome since it implies that it must not have any opportunities to invest that cash to actually obtain a good return. I always thought it was an excellent observation.


    * Professor Timothy Nantell, Univ of Mich.
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    Re: GM isn't done pruning

    At first I thought Buick, NA market is drying up and most Buick's were Opels. But Buick is too important in China, it's foot is too far in the door.

    However GMC is kind of redundant. Holden, well maybe.

    Look at Ford. (I know) They axed Mercury with no real hiccups, They axed Mercury Trucks years back and became the "Best Selling Truck". Even Lincoln no longer has a truck, the F150 Limited looks after that spot.

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    Re: GM isn't done pruning

    Quote Originally Posted by YEH View Post
    "There's a little bit more work that we're doing in the international markets," Barra told reporters on a conference call from Paris, after announcing Opel's sale to PSA Group of France in a deal that shrinks GM's global volume by 12 percent. "Our overall philosophy is that every country, every market segment has to earn its cost of capital."
    I hope Mary is not being too literal on the part in bold, or GM would never enter a growing market or segment again.
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    Re: GM isn't done pruning

    It's as if GM wants to get out of the car business.....
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    Re: GM isn't done pruning

    While I'm saddened by the new GM's lesser focus on performance vehicles, I am happy to see GM now running itself like a business and not a charity. If the profits aren't there and there is no real hope for meaningful profits - dump the market. They need to retrench, focus on profits and then pick and choose what markets to re-enter, if ever.

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    Re: GM isn't done pruning

    Quote Originally Posted by BlackGTP View Post
    While I'm saddened by the new GM's lesser focus on performance vehicles, I am happy to see GM now running itself like a business and not a charity. If the profits aren't there and there is no real hope for meaningful profits - dump the market. They need to retrench, focus on profits and then pick and choose what markets to re-enter, if ever.
    I guess that I need to know that GM still wants to be in the car biz, not simply make Wall Street happy. I need to know that they have a passion for delivering the best cars and trucks on the planet and I need to know that they acknowledge this is the core of their business.
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