Quick Summary

General Motors (GM) is one of the largest automobile makers in the world. The current company emerged from the bankruptcy of the original General Motors in 2009. The company operates in four segments. GM North America sells vehicles (passenger cars, trucks, and crossovers) and parts in North America, accounting for 77% of overall company sales. GM International does the same outside of North America, primarily in China and South America, accounting for 12% of sales. GM Financial is the company's vehicle financing operation, generating 11% of sales. Cruise is the firm's autonomous driving effort, and generates essentially no revenue at present. The company sells its products through a network of about 12,000 independent dealers worldwide, as well as to rental fleets (about 16% of sales). GM markets under 5 main brands: Buick, Cadillac, Chevrolet, GMC, and Holden. In the U.S., about half of GM's sales are passenger pickup trucks, while 40% are crossovers (SUVs primarily), and the remaining 8% cars.

Does The Company Have Recurring And/Or Rising Revenues?

NO. GM has seen its revenues decline by 6% annually over the past 3 years, and the firm's current revenue run rate is the lowest it has been since re-organizing in 2009. Vehicle volume sales have fallen each of the past 3 years, from a high of 10 million in 2016 to 7.7 million in 2019. Global market share has also collapsed, from a high near 12% in 2016, to 8.5% in 2019. Globally, automobile sales have been roughly flat at 90 million units since 2015. This is not a growth market, the future points to electric vehicles (a major transition for GM), and competition is ever-increasing, all bad news for revenue growth here. Of course, vehicle sales are in no way recurring, as consumers tend to keep vehicles for almost 7 years on average, and often cross-shop and change brands with each purchase.

Does The Company Have Durable Competitive Advantages?

NO. Automobiles are a difficult industry, with high capital costs, cyclical and economically sensitive demand, regular labor disputes, and few opportunities for durable competitive advantages. GM's marques are well-known, but outside of a small and declining sliver of brand die-hards, do not provide "automatic purchasing" or pricing power needed to claim a competitive brand advantage moat. While GM is the market share leader in North America and South America, these are fleeting statistics and in any case provide no real competitive edge. Competition in this space continues to increase, notably from foreign entries (Korea's Kia and Hyundai most recently, Japanese brands before that, potentially Chinese brands in the future), and from the disruptive electric vehicle side as well (Tesla, and more coming). This is a clear "no moat" company.

GreenDot Rating: RED

General Motors was a great American company, one of the most well-regarded and nostalgic industrial firms of early 20th century America. It's also well past its prime, operating in an incredibly difficult industry with high capital and labor costs, incredibly cyclical demand, disruptive new technology trends, and massive global competition. Compounding this is a pension that is underfunded by almost $12 billion dollars, nearly a quarter of GM's market cap! Any way you slice it, and however you feel about the company or its brands, as an investable company this is just one we cannot recommend in any way. It is a RED (unattractive) business.