GM - General Motors

[Liberty]

And Tesla wrecking everyone's profits? If they came up with an electric pickup truck, I'd be running for the hills.

 

It is planned:

 

http://www.businessinsider.com/tesla-pickup-truck-2013-11

 

Wouldn't be surprised if after the Model 3 they came out with another smaller model based on the 3 platform and then a larger F150-style electric pickup truck.

[vinod1]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

 

Ride-sharing, EVs and autonomous driving will boost car sales in a substantial way. Think about it.

 

In rich countries, most cars will still be personal and private and that will not change overnight. In developing countries however, ride-sharing means that car use will go up dramatically because now there is no personal capital outlay needed and users can spend 10 minutes or 10 days in a car every month depending on their financial means. The result of that, I think, is likely to be substantial growth in car sales across the billions of people in the developing world. Before, that would never have happened because you needed to raise 10's of thousands of dollars for your own vehicle and after that you only shared it with 1 or 2 family members at most.

Just go check how many cars there are in total across the developing world versus how many people there are who would use one for some portion of their day. Then look at global annual car production numbers. It seems incredibly unlikely that car sales are going to see anything but a boom over the next decade or two because of ride-sharing.

Also, keep in mind that ride-sharing will never be totally efficient. There will always need to be enough vehicles for peak times in and out of cities, even with incentives for pooling and changing work habits. I think the '7 cars taken off the road for every Uber' that Travis Kalanick talks about will only happen in the West where people still love their private property.

 

Then come EVs with far fewer working parts and therefore lower upkeep costs (like some sort of mobile phone on wheels) as well as hugely lower refuelling costs because you can 'fill your tank' for only a few bucks. Odds are that lower maintenance costs and nearly free fuel will once again drive sales because the cost of moving goods or people will have had a huge chunk of the costs taken out. Lower prices for moving around obviously tend to result in increased demand for that service.

 

Finally, autonomous vehicles take the other big cost out of the equation because now you no longer need to pay a driver thousand of dollars every year or provide them with benefits and so on. Again, add not having to pay for a driver or fuel (basically minimal) and getting in a car anywhere around the world will be like opening the faucet at home and letting it run for a few minutes. The cost will pretty much have no serious impact on the wallets of people in countries that are still even considered 'developing' 15 or 20 years from now.

 

I should add though, that this does not mean today's auto companies will win even if they clearly have the factories and ability to do so if that's what they want. Clearly there's a little thing called institutional inertia which might say otherwise, but there's no physical law stopping it from getting done.

Also, I think cars will get smaller, smarter and cheaper over time just like cellphones and so even though absolute numbers will rise the amount that they sell for may drop considerably. Then again, if you're looking at this from a margin perspective you might see one or two autonomous EV makers get really rich if they can pull off an Apple or some such thing.

Anyway, those are pretty much my thoughts on vehicle sales globally over the next 10 or 20 years. Always open to change of course, if and when new information and ideas are introduced.

 

PS. Finally, let me just add that what Muscleman said needs to be taken into consideration and rapid technological advances will also mean that replacement cycles on cars will be very quick (maybe a year or two like phones) and they'll be almost completely recyclable and if the global population is around 15 billion at some point in the future then maybe we'd need 4 or 5 billion cars purely for moving humans and perhaps another few billion for goods so if you look at where we currently are many cars still need to be sold and the cost of driving and fuelling them is only going to get cheaper.

 

You make a good case for why ride sharing can increase car usage.

 

I am more inclined to think that the number people (or the number of trips) who wants to move from point A to point B, are not going to change all that much. So they are moving in owned cars right now or taking an expensive taxi (keeping aside other forms of transportation, which we know would also be impacted). So I do not really see any dramatic increases in commutes. Instead of having 2 or 3 owned vehicles per family, they might go with 1 or two vehicles in future and rely on ride sharing. Ride sharing might increase dramatically but it might not entirely eliminate the drag created by lower vehicle ownership. Just my guess.

 

Even if developing markets see a major increase in usage, I do not think profitability would be all that good for cars that are likely to sold in those markets.

 

I really do not have a strong view of how this would play out as I mentioned. I tend to be a bit more paranoid than most and assume any changes are for the worse. All this just to say, I cannot assume an optimistic future for current corp of auto companies. But long GM just the same :)

 

Vinod

[Picasso]

Picasso, have you read the following?

http://seekingalpha.com/article/3788616-beware-teslas-model-3-mess

 

Beware Tesla's Model 3 Mess

 

That's a discussion for another thread (why Tesla is overvalued or whatever) but I mention these threats only because someone asked why GM is so cheap and what is being missed.

 

But regarding that article, there was a really good post on TMC. 

 

http://www.teslamotorsclub.com/showthread.php/60103-Seeking-Alpha-Jan-4-Tesla-analysis-very-negative-article/page5?p=1327983&viewfull=1#post1327983

 

At least I think he did a really good job explaining what is going on when looking at TSLA vs. GM etc. 

 

An excerpt:

 

GM is only planning on building about 30,000 Bolts a year (according to information leaked from suppliers who have been told this by GM) and LG Chem only has enough extra capacity to build about 52,000 Bolts a year (and likely hurting other company's BEV efforts in the process). That's barely more than what Tesla produced last year. GM has the know how to build 500,000 Bolts if they wanted to, but 450,000 of them would be lawn ornaments due to lack of batteries. Not a good business strategy.

 

Tesla on the other hand is laying all the groundwork necessary to build 500,000 cars a year. I'm skeptical they will reach this goal by 2020, but I do think they will make 500,000 BEVs a year before anyone else does.

 

The two key elements to this new technology is battery production and long range charging. At the current evolution of the competition, Tesla will be very well established in the center of the market before anybody can solve these two problems.

 

The competition, or their suppliers will have to build their own Gigafactories (or equivalent) to compete. It takes about 5 years to bring that much capacity online from start of construction. Tesla is just about ready to start ramping production (with Panasonic's expertise BTW) and the competition hasn't even started thinking about it yet. It's like trying to win the Olympic marathon when one guy is already running the race and the potential competitors are still eating breakfast or in the shower.

 

On long range charging Tesla is also way ahead of the competition, though the competition is hiding it behind their press releases. CCS is the standard adopted by European and American car makers and Chadamo is the standard from Japan. Both look good on paper with fairly high theoretical maximum charge currents. But actual installations tell a different story. Chadamo has been around longer and has more installations, but very few are even close to the max charging capability because of limitations in the infrastructure in which they are installed.

 

If the competition comes out with BEVs that sell, that's not necessarily a bad thing, but no established company is going to be able to make BEVs in anything like small numbers until next decade. That gives Tesla plenty of time to entrench in the market and they are already well on their way to that.

 

To put the battery situation into perspective, there are about 100 million passenger and light truck vehicles built every year. It takes a Gigafactory equivalent to build 500,000 long range BEVs. For BEVs to just get to 10% market share will take building another 19 Gigafactories. Nobody is willing to lay out that kind of capital in such a short time. The majors have the credit to build one or two, but the cost of a Gigafactory is equivalent of the entire R&D or entire capital budget for an entire year for the biggest car companies. It's a major expense for a technology the top brass of these companies are still tepid about. The only way so many Gigafactories are going to get built in the next decade is if the majors get spooked in a very serious way about the coming of BEVs and governments step in to help build them.

 

I suspect what will happen is the majors are going to wait until it's too late and then some will be too weak to survive and the others will shrink the company retooling for the new technology and only survive by their fingernails. Companies like Toyota will likely survive because of their size. Other companies like Fiat-Chysler and Subaru might be out of the car business when the dust settles.

 

This will take time right?  I know people are betting that the valuation compensates for the risk and I'm not saying it happens tomorrow.  But there's a lot of expenses coming up for the auto industry if they can't kill off what these tech companies are doing.

 

[Jurgis]

Yeah, I'm thinking about getting rid of all my lawn and garden ICE powered tools/machines.

 

ICE powered lawn and garden tools are crap. They are loud, smelly, they need maintenance every year. I only have electrical ones (even snowblower). The only problem with electrical tools is the battery weight/power or cord if you go with AC power. I hope that we'll get to high power/low weight/battery electrical tools soon. But it is a harder problem than cars, since you don't carry cars in your hands.  :P

[Liberty]

Yeah, I'm thinking about getting rid of all my lawn and garden ICE powered tools/machines.

 

ICE powered lawn and garden tools are crap. They are loud, smelly, they need maintenance every year. I only have electrical ones (even snowblower). The only problem with electrical tools is the battery weight/power or cord if you go with AC power. I hope that we'll get to high power/low weight/battery electrical tools soon. But it is a harder problem than cars, since you don't carry cars in your hands.  :P

 

The world will be such a better, more pleasant place when all these tools are electric. Nothing ruins the summer months more than hearing one lawnmower after the other every day, and now the people with leaf blowers because raking/sweeping is too much work... Ugh.

[Jurgis]

The world will be such a better, more pleasant place when all these tools are electric. Nothing ruins the summer months more than hearing one lawnmower after the other every day, and now the people with leaf blowers because raking/sweeping is too much work... Ugh.

 

If I was a gun carrying Amerih-can, there would be a lot of bodies in neighbors yards by now.

 

This message will self destruct when any gun-related comment is posted.

[Guest ajc]

You make a good case for why ride sharing can increase car usage.

 

I am more inclined to think that the number people (or the number of trips) who wants to move from point A to point B, are not going to change all that much. So they are moving in owned cars right now or taking an expensive taxi (keeping aside other forms of transportation, which we know would also be impacted). So I do not really see any dramatic increases in commutes. Instead of having 2 or 3 owned vehicles per family, they might go with 1 or two vehicles in future and rely on ride sharing. Ride sharing might increase dramatically but it might not entirely eliminate the drag created by lower vehicle ownership. Just my guess.

 

Even if developing markets see a major increase in usage, I do not think profitability would be all that good for cars that are likely to sold in those markets.

 

I really do not have a strong view of how this would play out as I mentioned. I tend to be a bit more paranoid than most and assume any changes are for the worse. All this just to say, I cannot assume an optimistic future for current corp of auto companies. But long GM just the same :)

 

Vinod

 

For North America and Europe that seems like a reasonable conclusion. One interesting addition though is that children might now need to be included in trips-taken numbers because they'd essentially be independent and have their own places to go, and the same might go for retirees. Would it be fair to say that another 10 million children and 20 or 30 million old people would need to be included in any ride volume assumptions.

One more little note, ride-sharing cars would be kaput after 5 years at most I'm thinking. The only reason cars nowadays last 15 years is because of limited use and therefore little wear and tear. The new paradigm would seem to be only a few years of life before your vehicle is of no use to anyone except a scrap dealer. I can't imagine that cars right now have been designed for 24/7 use over the course of more than a couple of years. So, that also might have some positive impact on replacement sales.

If you held a gun to my head right now on limited information, I'd say ride-sharing in the US and Europe has a net neutral to net slightly negative effect on sales. If sales dropped by between 5 and 10% over the next 5 years because of Uber and Lyft (all other demand things being equal, which clearly is quite an assumption) I'd be somewhat surprised that such an impact had been made over such a short space of time (and I do some reading on these companies and their current growth rates, so I'd like to think I'm not completely ignorant about this stuff).

 

Having said that, I could well be wrong and your point about dramatic increases in ride-sharing may turn out to be the one that is more correct. One only has to look at cellphone sales over the past 5 years to see how these things can catch on like wildfire. Just as an aside, laptop and desktop sales might be worth looking at as a proxy for traditional car ownership. Their relationship to smartphone and tablet sales might be of some use if you can work out how one set has impacted the other and then clearly take into account the sharpness of the adoption versus degradation curves. Then again, there might be no use in it. That was just off the top of my head, so I'd need to investigate further.

 

Another thing I wanted to mention is that the financing landscape might change in an important way. Right now, lenders look at your credit score, income and so on. In a ride-sharing world, doesn't it make more sense for lenders to look at demand in a given place. If India has 7 cars per 100 people and a resident in some small town goes to the bank looking for a car loan, they might previously have laughed him out of the branch. If Ola and Uber can now roughly estimate what sort of traction they'd get there based on their overall previous Indian experience, wouldn't it make sense for the entire lending model to shift from one based on the private individual's ability to pay back the loan to one where the demand we can estimate out there in that town is now used as the ultimate criteria. That way, if the guy can't pay back the loan, they simply repossess the car, get another driver who works in the same town and he takes over that Ola or Uber job.

I guess my question would be that if demand was driving sales instead of the ability of an individual to commit capital, then even towns with really small economies could get 2 or 3 more cars per 100 residents and it would still be entirely economical for the banks, the drivers and for Ola or Uber. Take 2 or 3 percent of 1.5 billion people who as of today might actually be able to afford an entry-level car if you spread the usage around and that is a substantial amount of demand.

 

By the way, I'm clearly making those numbers up but my point is you can easily imagine a scenario globally where 5 billion people get an extra 2 vehicles per 100 people and that might be applicable today for all we know. As you say, those might not be very profitable vehicles but then again cable companies made crazy money for years off of the bundle and ride-sharing vehicles are in some ways a form of bundled ownership so there might be some way that it can be done in which every participant benefits to a sensible degree.

Though that's not to say that is what will happen, your point about paranoia is clearly worth keeping in mind here.

I do think though that there is a chance that the market is already out there and we just don't know about it because we're used to the old lending standards and economic paradigms and there must be some chance that the old elitist ownership structure is a bit like when only rich, white people had landlines only 10 or 20 years ago (depending on where you lived of course, but that was true for 90% of the globe) and now instead everyone has their own cellphone.

 

Anyway, I really like this ride-sharing and technological change business but you know more about the actual auto industry than I do and considering that that's where some money currently might best be made, it's best if I shut up now and thank you for your posts on the various car threads which've been helpful to me in terms of forming my own opinions on where and what the opportunities in the space might currently be.

 

Kind Regards.

[vinod1]

You make a good case for why ride sharing can increase car usage.

 

I am more inclined to think that the number people (or the number of trips) who wants to move from point A to point B, are not going to change all that much. So they are moving in owned cars right now or taking an expensive taxi (keeping aside other forms of transportation, which we know would also be impacted). So I do not really see any dramatic increases in commutes. Instead of having 2 or 3 owned vehicles per family, they might go with 1 or two vehicles in future and rely on ride sharing. Ride sharing might increase dramatically but it might not entirely eliminate the drag created by lower vehicle ownership. Just my guess.

 

Even if developing markets see a major increase in usage, I do not think profitability would be all that good for cars that are likely to sold in those markets.

 

I really do not have a strong view of how this would play out as I mentioned. I tend to be a bit more paranoid than most and assume any changes are for the worse. All this just to say, I cannot assume an optimistic future for current corp of auto companies. But long GM just the same :)

 

Vinod

 

For North America and Europe that seems like a reasonable conclusion. One interesting addition though is that children might now need to be included in trips-taken numbers because they'd essentially be independent and have their own places to go, and the same might go for retirees. Would it be fair to say that another 10 million children and 20 or 30 million old people would need to be included in any ride volume assumptions.

One more little note, ride-sharing cars would be kaput after 5 years at most I'm thinking. The only reason cars nowadays last 15 years is because of limited use and therefore little wear and tear. The new paradigm would seem to be only a few years of life before your vehicle is of no use to anyone except a scrap dealer. I can't imagine that cars right now have been designed for 24/7 use over the course of more than a couple of years. So, that also might have some positive impact on replacement sales.

If you held a gun to my head right now on limited information, I'd say ride-sharing in the US and Europe has a net neutral to net slightly negative effect on sales. If sales dropped by between 5 and 10% over the next 5 years because of Uber and Lyft (all other demand things being equal, which clearly is quite an assumption) I'd be somewhat surprised that such an impact had been made over such a short space of time (and I do some reading on these companies and their current growth rates, so I'd like to think I'm not completely ignorant about this stuff).

 

Having said that, I could well be wrong and your point about dramatic increases in ride-sharing may turn out to be the one that is more correct. One only has to look at cellphone sales over the past 5 years to see how these things can catch on like wildfire. Just as an aside, laptop and desktop sales might be worth looking at as a proxy for traditional car ownership. Their relationship to smartphone and tablet sales might be of some use if you can work out how one set has impacted the other and then clearly take into account the sharpness of the adoption versus degradation curves. Then again, there might be no use in it. That was just off the top of my head, so I'd need to investigate further.

 

Another thing I wanted to mention is that the financing landscape might change in an important way. Right now, lenders look at your credit score, income and so on. In a ride-sharing world, doesn't it make more sense for lenders to look at demand in a given place. If India has 7 cars per 100 people and a resident in some small town goes to the bank looking for a car loan, they might previously have laughed him out of the branch. If Ola and Uber can now roughly estimate what sort of traction they'd get there based on their overall previous Indian experience, wouldn't it make sense for the entire lending model to shift from one based on the private individual's ability to pay back the loan to one where the demand we can estimate out there in that town is now used as the ultimate criteria. That way, if the guy can't pay back the loan, they simply repossess the car, get another driver who works in the same town and he takes over that Ola or Uber job.

I guess my question would be that if demand was driving sales instead of the ability of an individual to commit capital, then even towns with really small economies could get 2 or 3 more cars per 100 residents and it would still be entirely economical for the banks, the drivers and for Ola or Uber. Take 2 or 3 percent of 1.5 billion people who as of today might actually be able to afford an entry-level car if you spread the usage around and that is a substantial amount of demand.

 

By the way, I'm clearly making those numbers up but my point is you can easily imagine a scenario globally where 5 billion people get an extra 2 vehicles per 100 people and that might be applicable today for all we know. As you say, those might not be very profitable vehicles but then again cable companies made crazy money for years off of the bundle and ride-sharing vehicles are in some ways a form of bundled ownership so there might be some way that it can be done in which every participant benefits to a sensible degree.

Though that's not to say that is what will happen, your point about paranoia is clearly worth keeping in mind here.

I do think though that there is a chance that the market is already out there and we just don't know about it because we're used to the old lending standards and economic paradigms and there must be some chance that the old elitist ownership structure is a bit like when only rich, white people had landlines only 10 or 20 years ago (depending on where you lived of course, but that was true for 90% of the globe) and now instead everyone has their own cellphone.

 

Anyway, I really like this ride-sharing and technological change business but you know more about the actual auto industry than I do and considering that that's where some money currently might best be made, it's best if I shut up now and thank you for your posts on the various car threads which've been helpful to me in terms of forming my own opinions on where and what the opportunities in the space might currently be.

 

Kind Regards.

 

ajc,

 

Lots of food for thought. Thanks for sharing your views on the ride sharing.

 

I would love to hear any additional thoughts you have on this. I clearly need to put more effort into this.

 

Vinod

 

 

[beerbaron]

About car sharing

I remember seeing an article once about a Russian politician that said something in the lines: "It's cheaper to use taxis than to own a car so we don't know why anybody would personnaly own a car".

 

What the politician was missing is that a car ownership is not only for moving from point A to point B. It also represents a status and symbol of liberty. I'm not sure that today is any different than half a century ago... Maybe less cars per households but that's about it.

 

BeerBaron

[Shooter MacGavin]

does anyone understand why >$1B of their cash goes towards Pension/OPEB payments?  they said something in the past related to a pay-as-you go plan in Europe.  I guess if it the expense portion is not hitting the EPS, I'm not capturing it in a valuation.  Anyone have thoughts around how to account for this?  That's real money between the ~$9B they'll supposedly earn in FY16 and the only 5-7B in CF they'll have. Their SEC filings are such a f'ing mess.

 

I hope this dieselgate thing doesn't get uglier.

 

 

[rmitz]

About car sharing

I remember seeing an article once about a Russian politician that said something in the lines: "It's cheaper to use taxis than to own a car so we don't know why anybody would personnaly own a car".

 

What the politician was missing is that a car ownership is not only for moving from point A to point B. It also represents a status and symbol of liberty. I'm not sure that today is any different than half a century ago... Maybe less cars per households but that's about it.

 

BeerBaron

 

Fun quip, but it’s not actually true.  I use the car for errands a few times a week, don’t use it for work commute, etc.  It’s *still* cheaper to own a car than to use Uber or something (not even real taxis!) Maybe not if you’re leasing a Tesla or something, but still.

[Jurgis]

Fun quip, but it’s not actually true.  I use the car for errands a few times a week, don’t use it for work commute, etc.  It’s *still* cheaper to own a car than to use Uber or something (not even real taxis!) Maybe not if you’re leasing a Tesla or something, but still.

 

Correct. Most trips would be round-trip, so chalk $50 of Uber/taxi fare per trip or so. 3 trips per week = $150. x 52 weeks = $7.8K per year. With cheapo $20K car lasting ~10 years (which it very likely will if you drive 3 trips per week), you are looking at car being much cheaper. Even if you put $1K per year on maintenance, $1K for insurance and account for fuel.

[Guest ajc]

ajc,

 

Lots of food for thought. Thanks for sharing your views on the ride sharing.

 

I would love to hear any additional thoughts you have on this. I clearly need to put more effort into this.

 

Vinod

 

 

I appreciate that. I intend on adding whatever further thoughts I have over time (possibly on another thread).

 

One rough calculation which can be done is that Kalanick said a year ago that Uber was adding 50 000 jobs to the US economy each month (that's the hypergrowth stage, so it's improbable they'll ever top that rate again).

Assume for the sake of argument that Lyft adds another 25 000 per month.

We know from recent Uber statements regarding their upcoming lawsuit, that half of those jobs are part-time.

 

If you work backwards, I think the average Uber driver makes around $20 per hour. Then by looking at how much they charge per call-out and mile by searching the internet, you'll be able to work out how much distance is covered by Uber and Lyft drivers per year nationwide.

If you turn that into a per vehicle number, you could get a rough idea of how many cars need to be sold to supply that demand. Times it by 7 for the cars taken off the road per Uber and you can put a number on the change.

Just from eyeballing it, it looks like it comes out at a pretty low number.

 

Keep in mind that a big use case is likely to be African American neighborhoods that were never served by cabs or cars before, as well as the fact that an expensive cross-city bus and train commute can now just be ubered for about the same price. I have no idea how many users that accounts for, but maybe public transport is the only real loser here over the next few years.

 

Anyway, from those figures you can plug in your own assumptions and figure out how much ridesharing might impact GM and other manufacturers.

If I think of anything else, I'll pass it on.

 

EDIT: Just a correction to what I wrote above. That 7 cars off the road number must be wrong, otherwise the disruption would be visible and everywhere. Maybe Uber is referring to utilization rates going from 5 to 35 percent or something, but if the actual cars were off the roads then cars sales in at least some major countries in the developed world would absolutely be falling of a cliff for the past 12 to 24 months. Not only that, but every major city in the world would be openly talking about how urban traffic had become completely decongested basically overnight. There's no indication that that's the case, and if anything the opposite is happening in China even though Didi does more rides than Uber and is growing exponentially as well.

 

I'm not sure what's at play, but I think the evidence for that 7 off the road number just doesn't exist. Maybe there are young and elderly and previous public transport users who have been added to the car using population, or maybe public transport systems are absolutely bleeding users, or maybe people are just taking more urban trips because Uber has so much liquidity and availability, but that figure just makes no sense to me when I consider what other numbers from other industries and areas are saying.

 

Anyway, I just wanted to correct that because I'm sure that multiplier doesn't belong in any figuring even if car utilization rates have shot up as a result of ridesharing.

Sloppy thinking on my part.

 

 

[compounding]

does anyone understand why >$1B of their cash goes towards Pension/OPEB payments?  they said something in the past related to a pay-as-you go plan in Europe.  I guess if it the expense portion is not hitting the EPS, I'm not capturing it in a valuation.  Anyone have thoughts around how to account for this?  That's real money between the ~$9B they'll supposedly earn in FY16 and the only 5-7B in CF they'll have. Their SEC filings are such a f'ing mess.

 

I hope this dieselgate thing doesn't get uglier.

 

Underfunded pension = debt equivalent

[nikhil25]

http://www.wired.com/2016/01/maven-gms-car-sharing-scheme-is-really-about-a-driverless-future/

[Guest ajc]

 

For anyone who is interested, here's a copy of Bill de Blasio's report (bottom of page) on how Uber and Lyft impact congestion, yellow cabs and public transport in New York.

Seems like cabs and public transport are taking most of the hit. Report says congestion is flat to slightly up.

That might be influenced by political motivations though, I couldn't say.

http://www.theverge.com/2016/1/15/10774878/uber-nyc-bill-de-blasio-traffic-study-failure

 

Also, Didi in China published some very basic numbers about how their services impact congestion over there (in case there's some sort of global comparison to be made).

https://www.techinasia.com/didi-kuaidi-reducing-pollution-traffic-congestion-china

 

 

[Shooter MacGavin]

here are some of the bellweather plaintiffs caught lying in court:

 

http://www.insurancejournal.com/news/national/2016/01/22/396070.htm

 

Hagens Berman are class action lawyers straight out of a John Grisham novel

[Shooter MacGavin]

does anyone understand why >$1B of their cash goes towards Pension/OPEB payments?  they said something in the past related to a pay-as-you go plan in Europe.  I guess if it the expense portion is not hitting the EPS, I'm not capturing it in a valuation.  Anyone have thoughts around how to account for this?  That's real money between the ~$9B they'll supposedly earn in FY16 and the only 5-7B in CF they'll have. Their SEC filings are such a f'ing mess.

 

I hope this dieselgate thing doesn't get uglier.

 

Underfunded pension = debt equivalent

 

 

I don't know that I agree with that...the US underfunded pension obligations for example will likely be fully funded by plan assets .  I wouldn't count it as straight debt.  From memory, their liability assumptions are very conservative (3% discount rate) and their plan's assets have been performing better than the 6% expected rate of return.  In fact, if you are penalizing the valuation on the "underfunded" pension liabilities just because it shows up on the balance sheet, I think that's probably too conservative.  In all likelihood, they won't have to really contribute anything more meaningful into the US plan. 

 

It's certainly not straight debt like either from a valuation point of view.  Pension expenses are sometimes negative and sometimes positive reported in income statement under corporate overhead I believe (or maybe I'm making that up). 

 

The European OPEB/Pension stuff is treated a bit differently.  Chuck Stevens said something about a "pay as you go" plan with a billion coming straight out of cash flow, which is a big chunk of the different between earnings and FCF.  That's the part I'm trying to figure out. 

 

I don't know.. this stuff is confusing and this company's accounting is poorly presented in my opinion.

[LowIQinvestor]

Market really doesn't believe anything GM says?

 

Chevrolet Continues as the Industry’s Fastest Growing Brand, Leading GM Retail Sales Increase

 

GM retail sales climbed 9 percent in January

Chevrolet retail deliveries up 12 percent in January – retail share up almost 2 percentage points

Buick retail sales up 45 percent

Commercial deliveries up for 27th consecutive month

 

http://www.gm.com/article.content_pages_news_us_en_2016_feb_0105-gmsales.html

 

"Average Transaction Prices/Incentives:

GM grew ATPs three times faster than the industry average from 2010-2015. In January 2016, ATPs were $33,600, about $3,000 above the industry average."

[str8shot]

Market really doesn't believe anything GM says?

 

Chevrolet Continues as the Industry’s Fastest Growing Brand, Leading GM Retail Sales Increase

 

GM retail sales climbed 9 percent in January

Chevrolet retail deliveries up 12 percent in January – retail share up almost 2 percentage points

Buick retail sales up 45 percent

Commercial deliveries up for 27th consecutive month

 

http://www.gm.com/article.content_pages_news_us_en_2016_feb_0105-gmsales.html

 

"Average Transaction Prices/Incentives:

GM grew ATPs three times faster than the industry average from 2010-2015. In January 2016, ATPs were $33,600, about $3,000 above the industry average."

 

GM is reinventing - exemplified by their $500M investment in and partnership with Lyft. This forward looking investment in ride sharing and driverless car services has huge promise in the years ahead.

[merkhet]

Nothing to see here... move along...

 

http://www.bloomberg.com/news/articles/2016-02-03/gm-beats-estimates-with-suvs-in-high-demand-from-u-s-to-china

 

Adjusted earnings per share improved to $1.39 from $1.19 a year earlier, GM said in a statement Wednesday. The average of 14 estimates compiled by Bloomberg was $1.20. Margins were boosted in North America by sales of more expensive sport utility vehicles and pickups, which added $1.3 billion to quarter’s revenue.

 

http://media.gm.com/content/dam/Media/gmcom/investor/2016/feb/earnings/GM-2015-Q4-Press-Release-Highlights.pdf

 

• Full-year 2015 EPS of $5.91; EPS-adjusted of $5.02, up 65 percent from 2014
  
• Fourth quarter EPS of $3.92; EPS-adjusted of $1.39, up 17 percent from 2014
  
• Fourth quarter net income of $6.3 billion; record EBIT-adjusted of $2.8 billion
  
• Returned $5.7 billion to shareholders in 2015
  

 

So, from a segment perspective for the quarter, NAFTA delivered $2.8 billion in EBIT, Europe delivered ($0.3) billion in EBIT, GMIO reported $0.4 billion in EBIT and South America reported $0.1 billion in EBIT. (GM Financial had $0.2 billion in EBT.)

 

My back of the envelope calculation (assuming 10% margin in NAFTA, break even Europe and everyone else staying roughly the same) has them doing almost $5.50 per share before further share buybacks.

[PLynchJr]

Good news?  Stock down.

 

Bad news?  Stock down.

 

No news?  Stock down.

[merkhet]

I know there are logistical reasons why they don't do this, but I really wish GM would just do a tender offer and blow through their buyback at these prices.

[Guest MarkS]

Today's price action is a big disappointment. Oh well.

[Investmentacct]

Good news?  Stock down.

 

Bad news?  Stock down.

 

No news?  Stock down.

 

One way to  deal with it is get used to it.  Rereading chapter 8 of Graham's classical work or recent Haward Marks memo  may help.