The auto industry in 2018

After trading on a positive note in 2016 and 2017, the stock of the largest US automaker, General Motors (GM), ended 2018 on a negative note with a loss of 18.4%.

Nearly all mainstream automakers underperformed the broader market last year due to weakening US auto sales and the negative impact of tariffs on their businesses.

How General Motors Stock Has Fared in Q1 2019 So Far

In 2018, the S&P 500 Index fell 6.2%, while auto companies such as Ford Motor Company (F), Fiat Chrysler Automobiles (FCAU), Toyota Motor (TM), and Honda Motor Company (HMC) fell ~38.1%, 18.9%, 8.7%, and 22.4%, respectively. The broader market largely traded on a positive note in every quarter of 2018 except the fourth, when factors such as rising interest rates and America’s trade war (SPY) with China and European countries started taking a toll on market sentiments.

GM stock’s performance in the first quarter

Auto stocks started 2019 on a strong note, with most legacy automakers outperforming the broader market in January. Better-than-expected 2018 US auto sales, which were slightly higher than sales in 2017, helped boost investors’ confidence. In January and February, GM stock rose 16.7% and 1.2%, respectively.

However, the stock has erased some of these gains in March. As of March 20, General Motors has fallen ~6.3% so far this month compared to the 1.4% gain in the S&P 500 benchmark. In comparison, Ford, TM, and HMC have fallen 3.0%, 1.1%, and 2.9%, respectively.

Before we take a look at one of the key drivers of GM’s recent losses, let’s take a quick look at the trend in its financials.

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