GM to Shift Korean Production

Zacks

General Motors Company (GM) plans to shift a large part of its production of subcompact SUV Opel Mokka, aka Buick Encores in North America and China, from South Korea to Spain in order to improve the proximity with the European market and reduce losses of the luxury division Opel.

The automaker decided to produce the vehicle at Opel’s unit in Zaragoza. It has received orders of more than 100,000 Mokkas since its launch half a year ago. Demand for the vehicle remained strong but there were supply bottlenecks.

Opel Mokka hit the headlines a couple of months back when General Motors  recalled 144 units of its 2013 model in order to fix their steering wheel fastener that may not have been properly installed. The vehicles were built by GM Korea between Dec 9 and Dec 28 last year.

General Motors, a Zacks Rank #3 (Hold) stock, reported a 28.0% fall in earnings to 67 cents per share in the first quarter of the year from 93 cents in the same quarter of 2012 (all excluding special items) due to lower earnings generated from the company’s all geographic operations except Europe. Despite this, the automaker’s earnings exceeded the Zacks Consensus Estimate by 11 cents per share.

Net earnings fell 31.3% to $1.1 billion from $1.6 billion in the first quarter of 2012. Including net loss from special items, earnings were $0.9 billion or 58 cents per share in the quarter compared with $1.0 billion or 60 cents a year ago.

Revenues in the quarter slid 2.4% to $36.9 billion, despite a 3.6% rise in retail unit sales to 2.4 million vehicles globally. It was higher than the Zacks Consensus Estimate of $36.4 billion.

Few stocks that are performing well in the broader industry where GM operates include Toyota Motor Corp. (TM) with Zacks Rank #1 (Strong Buy) and Honda Motor Co. (HMC) and Peugeot S.A. (PEUGY), both with Zacks Rank #2 (Buy).

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