General Motors (GM) Down Despite Investment Plans in Brazil

Zacks

Shares of General Motors Co. (GM) fell 0.3% and closed at $33.84 on Aug 15, despite the automaker’s announcement of expansion plans in Brazil. The dip can be reasoned by an unfavorable impact of overall market movement. General Motors do Brasil – the largest subsidiary of General Motors in South America – announced its intentions of investing $2.9 billion in Brazil in the 2014–2018 period.

General Motors plans to utilize the funds to develop new products and technologies, and to train employees. Further, it intends to enhance the Chevrolet line-up and focus on ramping up technology and quality. In addition, the automaker proposes to utilize the funds to increase nationalization of car components made in Brazil.

General Motors is presently focusing on its operations in the emerging markets, particularly Brazil, China and India, to recoup global sales and meet the growing demand by increasing capacity investment. Also, the automaker expects this long term investment to further strengthen its traction in Brazil.

In a separate development, General Motors announced its decision to build a new stamping facility at its Lansing Grand River Assembly plant in the U.S. The automaker intends to invest $174 million in the plant, which will create about 145 new jobs.

The stamping facility is likely to start operations from 2016 and will be producing stamping components for the Cadillac ATS and CTS family of vehicles. With this, General Motors expects to see savings of $14 million in material handling related logistics costs every year.

General Motors currently carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks worth considering include Tesla Motors, Inc. (TSLA), Visteon Corp. (VC) and STRATTEC Security Corp. (STRT), all of which sport a Zacks Rank #1 (Strong Buy).

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