General Motors Co.’s (NYSE: GM) trouble in the United States continues to be joined by its battle for vehicle sales in Europe. While recalls in America have topped 17 million, GM almost certainly will add to its decade-long string of European losses, which stretch into the billions of dollars. GM’s earning will continue to be dragged down by the ongoing trend.
GM Europe lost $284 million during it most recent reported quarter. The primary reason is that its market share continues to shrink, particularly because of the strength of Volkswagen, the top manufacturer in the market.
In May, GM’s sales in Europe dropped 6.8% to 81,745. Its market share dropped from 8.4% in the same month last year to 7.5%. Rival Ford Motor Co. (NYSE: F) has nearly caught GM in sales. Sales of all vehicles in Europe rose 4.5% to 1,093,448.
VW has 26.5% of the market in Europe, well above GM’s 19% of the U.S. market. VW’s European sales rose 9.6% in May to 290,199. It was an extraordinary level of expansion given its size. PSA Group, the second largest manufacturer by sales, grew 4.3% to 120,128. Third place manufacturer Renault’s sales rose 18.8% to 101,344. The success of these companies shows just how trouble GM’s European operations are in.
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While GM continues to do well in the United States, many people who follow the car industry believe that could change in the future as recalls pile up, along with news of injuries and deaths. Trouble in the United States will leave only China to bolster GM’s global numbers. The number one U.S. car company vies with VW most months for the sales lead in the People’s Republic.
GM could use an improvement in overseas results as it takes significant financial charges for the costs of recalls. Recalls in America have gotten large enough that the company may even need help from its international operations to offset potential red ink from its home market. Europe, instead of helping, will make GM’s earnings even worse in the quarters ahead.
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