2024-06-28 05:09:56 ET
Summary
- General Motors never recovered after 2020 despite a significant increase in car prices as people have avoided buying new vehicles.
- Higher interest rates and insurance costs create added negative pressure on the auto market, resulting in declining new car prices.
- General Motors faces significant recession risk due to increasing costs, lower unit sales, and potentially higher delinquencies in its financing unit.
- The company is not significantly overvalued unless a significant unemployment-driven recession occurs, which I am beginning to expect.
- A rise in unemployment would swiftly harm General Motors because household auto debt is elevated, and there are some indications of a glut developing at dealerships.
At the end of 2022, I published a neutral view of General Motors ( GM ) in " General Motors May Beat Tesla To An Electric Vehicle Future. " Though I was neutral on GM, I believed the stock might have some long-term value as many investors seem to underappreciate its gains in the EV market compared to more popular competitors like Tesla ( TSLA ). However, I was not bullish on GM because it seemed as though it was not well positioned in the economic cycle. Since then, GM has risen by around 14%, underperforming the S&P 500, thus confirming my neutral view. ...
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General Motors: Trouble Ahead As Auto Loan Delinquencies Set To Surge