General Motors Stock Fell Due to Lower Q4 Vehicle Sales

General Motors (GM) stock fell nearly 3% on January 3 after it released dismal sales data for the fourth quarter of fiscal 2019. The company delivered 735,909 vehicles to US customers in the fourth quarter—6.3% lower than the same quarter the previous year. For 2019, General Motors’ total deliveries fell 2.3% YoY (year-over-year) to 2.89 million. The 40-day strike at the company’s plants in the fourth quarter impacted the overall deliveries in the last quarter and fiscal 2019.

General Motors’ deliveries

The company recorded a YoY decline in shipments of all of its brands in the fourth quarter. The total sales for the company’s Buick brand fell 4.3% YoY to 49,074 units in the fourth quarter. For 2019, the brand’s overall deliveries grew marginally YoY to 206,929 from 206,863.

The Cadillac brand’s sales fell 2.2% YoY to 40,551 units in the fourth quarter, while the sales grew 1% YoY to 156,246 units in fiscal 2019. General Motors’ Chevrolet brand sales fell 6.1% YoY to 499,404 units in the last quarter. For 2019, the brand’s total deliveries fell 3.8% YoY to 1.96 million units. The GMC brand’s overall shipments fell 8.5% YoY to 146,880 units in the fourth quarter. However, GMC’s sales grew 1.5% YoY to 564,946 units in 2019.

Crossovers and big vehicle sales are strong

Despite a YoY decline in 2019 total deliveries, General Motors continues to register strong sales for its crossovers and big vehicles. The company recorded over one million crossovers sales for the second year in a row. General Motors’ crossovers sales grew 12.7% YoY in 2019.

The company said that combined sales for its SUVs and pickup trucks also crossed the one million mark. Kurt McNeil, the vice president of US sales operations, said, “We’ve focused our resources on what our customers want – crossovers and trucks – and that has paid off.”

He also said, “In addition to our industry leading crossover sales, our full-size truck franchise is unmatched. We’re pleased with our full-size pickup launch and we look forward to launching our segment-leading, all-new full-size SUVs in 2020.”

Peers’ sales

Ford (F), the second-largest US automobile company, also reported dismal auto sales results for the fourth quarter and fiscal 2019. The company’s vehicle shipments fell 1.3% YoY to 601,862 units in the fourth quarter. During fiscal 2019, Ford delivered 2.42 million units—3% lower than in 2018.

Fiat Chrysler (FCAU) also reported a YoY decline in its fourth-quarter and fiscal 2019 sales. The company’s fourth-quarter sales fell 2% YoY to 542,519 units, while the deliveries for 2019 fell 1% YoY to 2.2 million units.

On January 3, Tesla (TSLA) reported its sales data for the fourth quarter and 2019. The company delivered 112,000 vehicles globally in the fourth quarter, which beat Wall Street’s estimate of 106,000. Tesla shipped 367,500 vehicles in fiscal 2019, which reflected YoY growth of about 50%. The company also beat the low end of its delivery target of 360,000–400,000. To learn more, read Tesla Lives Up to Expectations, Deliveries Beat Estimate.

Another electric vehicle maker, NIO (NIO) also reported strong sales data for December and the fourth quarter. The company’s deliveries for December increased by 25.4% month-over-month to 3,170 units. In the fourth quarter, NIO shipped 8,224 vehicles—higher than its earlier guidance of 8,000 units.

Analysts’ Q4 expectations for General Motors

General Motors is scheduled to report its fourth-quarter results on February 5. Analysts expect the 40-day worker strike to take a toll on the company’s overall financial performance. They expect the revenues to fall 24.5% YoY to $29 billion in the fourth quarter. The EPS projection of $0.09 for the quarter shows a YoY decline of 94%.

For fiscal 2019, analysts expect the revenues to fall 7% YoY to $136.8 billion. Wall Street’s earnings forecast of $4.82 per share shows a YoY decline of 26.3%.

Despite dismal fourth-quarter and 2019 top and bottom-line projections, most of the analysts are bullish on General Motors stock. About 76% of the 17 analysts covering the stock recommend a “buy” or equivalent rating. The remaining 24% of the analysts recommend a “hold.” The average target price of $47.82 on General Motors stock shows an upside potential of 32%.