March, 2012Global Automotive Industry Top Pick: General Motor versus Ford

March, 2012Global Automotive Industry

Top Pick: General Motor versus Ford

• Automobile Industry has been one of the rapidly growing sectors in the world. The industry involved in the design, development, manufacture, marketing, and sale of motor vehicles.

• Over the years, the Industry have played a catalytic role in the development of a country’s transport sector and has a strong multiplier effect on a nation’s economy.

Overview

In 2011, more than 77 million units of motor vehicles, including cars and commercial vehicles were produced worldwide. Apart from that, the heavy commercial vehicles produced in the year 2011 were approximately 3.7 million units

Further, the global automobile industry sales have grown at 4% during 2011 to 75m units of cars and light trucks, significantly lower than 13% sales growth registered in 2010, mainly due to the socio-economic problems and natural disasters including the Japanese earthquake and tsunami, floods in Thailand and impact of sovereign debt crisis in the European Union (EU)

The Industry also experienced a stalled in the production capacity during 2011, mainly due to the exponential growth in the production capacity of cars and light trucks by 25% during 2010 . This in turn has led to overcapacity in the industry, which is anticipated to work itself out over the next few years, as shown in the above chart.

Global Automotive Industry

-15%

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5%

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15%

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30%

2008 2009 2010 2011 2012E 2013E 2014E 2015E

Real GDP Growth Light Vehicles Sales Growth Light Vehicles Production Growth

% annual change

Source: International Monetary Fund (IMF) and LMC Automotive Ltd

• Over the last three years, both global light vehicle sales and production (including passenger vehicle and light commercial vehicle) have grown at an average annual rate of 14% each.

• Similar to the cars and light trucks segment, the global HCV (heavy commercial vehicles) segment rebounded strongly in 2010 and saw corrections in 2011 with sales growing and production being reined-in.

• Continue growth expected in light vehicle sales and production during 2012, while slight decline is expected in both global production and sales of global HCV segment before rebounding to single digit growth level in 2013

Global Light Vehicle Sales, 2008-2013E


Source: LMC Automotive Ltd

Global Light Vehicle Production, 2008-2013E

Global HCV Sales, 2008-2013E Global HCV Production, 2008-2013E

52 4656 58 62 67

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2008 2009 2010 2011 2012E 2013E

units in million

• In 2011, a total of 75 million new automobiles were sold worldwide: 30 million in Asia-Pacific, 19 million in Europe, 15 million in USA, Canada and Mexico, 5 million in South America, 2 million in the Middle East and Africa and rest 3 million in other countries.

• The markets in North America and Europe grew by 9% and 4% respectively. While the sales of the automobiles in other major markets including Asia, Middle East Africa and South America were quite stagnant during 2011.

• On a regional basis, HCV sales in North America remained strong, whilst Asia and South America saw some contraction.

• The United States is the world’s largest consumer market for light vehicles, passenger cars and light trucks. The United States auto industry is mainly dominated by the Big Three which are General Motors, Ford Motors and Toyota.

• These three account for roughly a little over half of the production of cars and light trucks in the industry. In 2011, the General Motors, Ford Motors and Toyota together accounted for nearly 47.6% of market share by sales. This trend is expected to continue but to taper off in the coming years

Regional Light Vehicle Sales, 2008-2013E

Global Automotive Industry – Region-Wise


Regional Light Vehicle Production, 2008-2013E

19 2329 29 32 36

2118

18 19 181916 13

14 15 1618

4 4

5 55

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2008 2009 2010 2011E 2012E 2013E

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• The auto manufacturers endeavor to identify consumer preferences and national biases by extensive research to enable them to respond rapidly to consumer needs and gain market share by addressing the new market segments identified.

• To shun off the market competition, automobile manufacturers establishes production facilities outside their home bases to capture increasing market share and to conduct manufacturing processes with maximum efficiency and reduced fixed costs per vehicle.

• Automobile industry is investing in green technologies and going forward low carbon technologies would play a dominant role in the evolution of autos industry

Automobile Sector Growth Drivers (PEST Analysis)


Source: Google

• During the recent years, with rapidly rising oil prices, industries such as the automotive, are experiencing a combination of pricing pressures from raw material costs and changes in consumer buying habits. The industry is also facing increasing external competition from the public transport sector, as consumers re-evaluate their private vehicle usage

• A plethora of factors influence the automobile industry including Political, Economic, Socio- cultural, Technology and Demographics

Consumer preference

s

Governmentregulations

Market competition

Technology and

innovations

Economic growth and low vehicle penetration

• Standard and Poor's 500 Automobiles & Components Index is a capitalization- weighted index. The index was developed with a base level of 10 for the 1941-43 base periods. The parent index is SPXL2. This is a GICS Level 2 Industry group.

• The index over the last five years have declined at an annual average rate of 18% due to a deterioration of consumer confidence, economic uncertainty on the face of the ongoing European sovereign debt issues, the potential for developing economies facing extended slow growth period or a double-dip recession and overcapacity in the sector.

• Amid these concerns, the S&P 500 Auto Automobiles & Components Industry Group Index further declined by almost 11.6% in the past one year.

• However, when compared the last three years performance, the index price has grown at an average annual rate of c.199%. The index registered its highest jump during the year 2011, with share price reaching USD 129-130 levels.

• We believe, investing in the Automobile sector or companies over the long run could be a favorable bet, as the industry has potential to grow going forward.

• As of March 22, 2012 the index is trading at USD 98.18, almost 9.1% higher on year-till-date basis. The index 52 week low-high ranges from USD 71.16 – USD 120.08 and trading volume as of March 22, 2012 was 10,460,767.

S&P 500 Auto Automobiles & Components Industry Group Index (Ticker: S5AUCO)

Source: Bloomberg

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Volume Traded ('000) Share Price

• Among the Top 10 auto manufacturers, General Motors occupies a leading position in North America followed by Ford Group.

• At present GM holds 19.3% market share by sales in North America against 16.2% market share by sales held by Ford.

• Furthermore, GM remains popular in South American market with the highest market share by sales of 18.4%, followed by Volkswagen (18.0%), Fiat Chrysler (17.9%), Ford Group (9.2%) and Renault-Nissan (8.8%).

Global Market Share (by Sales) of Top 10 Auto Manufacturers, 2011-2013E

Market Share (By sales and Production)


• The top 10 global automobile companies around the world accounts for nearly 71% of the market share.

• Among them, the top three global auto giants as of today are Volkswagen Group, General Motors and Toyota.

• Toyota has occupied the top spot since 2008. However, in 2011 Toyota lost its title to Volkswagen with market share declining from 10.3% in 2010 to 9.1% in 2011 due to Toyota’s production hit by natural disaster during the year

• Volkswagen, currently leading the automotive industry market share by sales followed by General motors being second and Toyota Motors in Third position.

• Other major market players including Renault will continue to hold its fourth position, followed by Hyundai and Ford Group, which currently poised sixth largest market share by sales.

10.7

%

9.7%

9.1%

9.4%

8.3%

6.9%

5.5%

4.5%

3.9%

3.0%

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%

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4.5%

3.2%

9.8%

9.4% 9.9%

8.8%

8.0%

6.7%

5.1%

4.1% 4.7%

3.1%

Volkswagen Group

General Motors Group

Toyota Group Renault-Nissan Group

Hyundai Group Ford Group Fiat-Chrysler Group

PSA Group Honda Group Suzuki Group

2011 2012E 2013E

Global Market Share (by Production) of Top 10 Auto Manufacturers, 2011-2013E

Market Share (By sales and Production) Contd.


• Global production capacity ranking nearly mirrors that of the sales ranking discussed in above chart.

11.3

%

10.4

%

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%

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%

9.3%

7.1%

5.6%

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3.8%

3.2%

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%

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%

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%

9.8%

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%

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.9%

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4.2% 5.0%

3.3%

Volkswagen Group

General Motors Group

Toyota Group Renault-Nissan Group

Hyundai Group Ford Group Fiat-Chrysler Group

PSA Group Honda Group Suzuki Group

2011 2012E 2013E

North America Market Share (by Production) of Top 10 Auto Manufacturers, 2011-2013E

19.3

%

16.2

%

12.1

%

8.6% 10

.8%

18.6

%

16.0

%

13.2

%

9.4%

10.2

%

18.5

%

15.7

%

13.6

%

9.6%

9.9%

General Motors Group Ford Group Toyota Group Honda Group Fiat-Chrysler Group

2011 2012E 2013E

Company AnalysisGM vs. Ford

General Motor– Overview

Source: Company website and filings

• General Motors Co. (NYSE:GM, TSX: GMM) is an American multinational automobile corporation

– Founded in 1908 as General Motors Corporation, the company filed for Chapter 11 bankruptcy in March 2009 due to the company’s inability to settle down its debt.

• Re-formed in July, 2009, the company is headquartered in Detroit, Michigan.

• Company mainly manufactures and markets new cars and trucks. The Company offers features for special needs drivers, OnStar vehicle protection, service parts, accessoires, maintenance, XM satellite radio, features for commercial owners, and more.

– During the year 2011, the company’s revenues increased by 10.8% to USD 150 billion from USD 136 billion in 2010.

– The company’s vehicle sales unit in 2011 were up by 7.6% to 9.0 million units. Out of the total units sold, highest contribution were made by International and North America regions with 37% and 32% respectively.

– Passenger cars sales contributes nearly 38% of the total North America vehicle sales units.

• The companies Automotive business segment is broadly categorized into four geographies :

– GMNA (North America), includes U.S., Canada, Mexico, Central America and the Caribbean

– GME (Middle East), includes Western, Central Europe and Eastern Europe.

– GMIO (International) includes Asia−Pacific, Africa and the Middle East.

– GMSA (South America), includes Brazil, Argentina, Colombia, Ecuador and Venezuela, Bolivia, Chile, Paraguay, Peru and Uruguay.

• As of March 2012, the Company employs 205,000 people.

Business Description

Share price: USD 25.05closing price as of 03/22/2012

Bloomberg ticker GM

Market capitalization (USDm) 39,222

Shares out (m) 1566

Float 45%

52-Week Range 19 - 33.47

Avg Daily Volume (3 mth) 11,076

1-Year Total Return -19.61%

Estimated EPS - 2012E 3.74

P/E 6.88

Estimated P/E - 2012E 6.71

LT- Growth 14.65%

General Motor– Business/Product Analysis


Company Business Structure GMNA Vehicle Sales Portfolio (excluding Canada, Mexico and Other)

Midsize, 20%

Small, 11%

Luxury, 3%

Sport, 4%

Utilities, 9%

Pick−ups, 25%

Vans, 4%

Medium Duty, 0%

Crossovers, 25%

100% = 2,504 U.S. Vehicle Sales

• GM North America is the highest revenue contributor forming 60.8% of the total revenues during the year 2011.

– Out of the total GMNA revenues, c.87% revenues were solely contributed by United States and remaining 11% by Canada and Mexico. GM Financial Services contributes 2% of the total GMNA revenues.

• The Company’s total vehicle sales increased by 7.6% to 9.0 million units in 2011 from 8.4 million units in 2010.

• During the same period, GM North America vehicles sales increased by 11.4% to 2.9 million units, followed by 7.5% increase in GM International vehicle sales to 3.3 million units.

– Out of the 2.9 million units , United States standalone contributed 86% of the vehicle sales and the rest 14% were sold in Canada, Mexico and other regions.

– Among the Company’s United States vehicle portfolio, Pick-up (a category of trucks) and Crossovers leads the market position with almost 25% of contribution each. Further, the Company’s mid-size cars contributes nearly 20%.

General Motors

GM Europe (GME)

16.8% of 2011’ revenues

GM International Operations

(GMIO)


GM South America (GMSA)


GM North America (GMNA)


Business Segments

BrandPortfolio

U.S.A, Canada, Mexico, Central America and The Caribbean

France, Germany, Italy, Spain, United Kingdom and Other European Countries

Korea, Thailand and Other Asian Countries

Automotive Revenues

Argentina, Brazil, Venezuela and Other South American Countries

GM Financial Services

90,021 25,193 10,494 16,631

Others


6,527

Financials – USD million (2011)

Regional Coverage

1,410 N/A N/A N/A N/A

Buick, Cadillac, Chevrolet and GMC

Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Opel and Vauxhall

2011 Vehicle Production (‘000) 2,809 1,234 3,745 926 N/A

2011 Vehicle Sales (‘000) 2,924 1,735 3,302 1,065 N/A

Ford Group– Overview


• Ford Group, an automotive manufacturer (NYSE: F) designs, manufactures, and services cars and trucks .

– Founded in 1903.

– Headquartered in Dearborn, Michigan , USA

• Company mainly produces and sell cars , trucks, SUVs, Hybrids, Crossovers and Company also provides vehicle-related financing, leasing, and insurance through its subsidiary.

– During the year 2011, the company’s revenues increased by 5.7% to USD 136 billion from USD 128 billion in 2010.

– The company’s vehicle sales in 2011 were up by 7% to 5.1 million units.

– Continued strong performance in North America; challenges in Europe and South America; Thailand floods impacted Asia Pacific Africa

– Higher product momentum -- launched all-new global Ranger; launched 1.0-liter, 3-cylinder EcoBoost engine; and debuted all-new Escape in 2011.

– Broke ground on four new assembly and powertrain plants in Asia Pacific Africa region, and launched FordSollers joint venture in Russia

• The Company’s has two operating business segments:

– Ford Automotive Ford North America, includes U.S., Canada and Mexico. Ford South America, includes Brazil and Argentina. Ford Europe, includes United Kingdom, Germany, Italy, France, Spain,

Russia, Belgium and Other Ford Asia includes China, India, Australia, South África and ASEAN

Countries.

– Ford Credit Facility or Financial Services.

• As of March 2012, the Company employs 166,000 people.

Business Description

Share price: USD 12.32closing price as of 03/22/2012

Bloomberg ticker F

Market capitalization (USDm) 45,952

Shares out (m) 3730

Float 99%

52-Week Range 9.05 - 16.18

Avg Daily Volume (3 mth) 49,720

1-Year Total Return -13.55%

Estimated EPS - 2012E 1.48

P/E 8.21

Estimated P/E - 2012E 8.35

LT- Growth 11.44%

Ford Group– Business/Product Analysis


Company Business Structure

• Ford Automotive segment contributes approximately 94% of the total 2011 revenues and the remaining 6% from the Company’s Financial Services.

• More than 60% of the consolidated auto revenue is derived from truck sales, while car sales generate the balance. During, 2011 the Company’s sales of small cars were up 25% in 2011, giving Ford 10% market share in the small car segment and more than a full percentage point increase compared to 2010.

• Among the company’s Automotive segment, Ford North America contributes 70.6% of total 2011 revenues. Out of which, 87% of revenues came from United States and balance 13% from Canada, Mexico and other regions.

• The Company’s vehicle production during 2011 increased by 6.3% to and sales volume by 7.0%.

Ford Group

Ford Europe

26.3% of 2011’ automotive revenues

Ford Asia Pacific


Ford North America


Business Segments

BrandPortfolio

U.S.A, Canada and Mexico.

Brazil and Argentina

United Kingdom, Germany, Italy, France, Spain, Russia, Belgium and Others.

Automotive Revenues

Ford Financial Services

75,022 10,976 33,758

Financials – USD million (2011)

Regional Coverage

8,096

Fiesta, Focus, Fusion, Mustang, Taurus, Escape, Edge, Explorer, Flex, Expedition, Ranger, Transit Connect, E-Series, Super Duty.

2011 Vehicle Production (‘000) 2,605 438 1,637

2011 Vehicle Sales (‘000) 2,465 483 1,531

752

705

8,412

China, India, Australia, South Africa and other ASEAN Countries

Ford South America


Regional Analysis – GM vs. Ford


• GM and Ford are the top leading automobile providers in North America regions and enjoy the highest market penetration with 19.3% and 16.2% of market share by sales volume.

• GM currently has presence in almost 157 countries, whereas Ford distributes its automobiles in 200 markets across 6 continents.

• Among all the operating regions, United States generates maximum revenue for both GM and Ford contributing 53.1% and 52.2% respectively.

• General Motor registered highest revenue growth in Asia-pacific by 26%, vis-a-vis 14% increase in the Ford Asia Pacific revenues. GM had the number two market share for Asia Pacific regions at 9.5% and the number one market share in China. In 2011, among GM Asia Pacific regions, China derived 77.1% of the vehicle sales volume.

• Additionally, GM witnessed nearly 18% of revenues growth in South America, while Ford revenues in the region grew only by 11% during 2011.

• Further both GM and Ford are investing heavily on the emerging markets with the intention to capture higher market share. Ford is building seven new plants - four in China, two in India, and one in Thailand - as part of their plan to have production capacity of 2.3 million vehicles in the region by mid-decade.

General Motor- Regional Revenue Break-up, 2011 Ford Group- Regional Revenue Break-up, 2011

United States, 53.1%

Canada and Mexico, 6.8%

France, 1.6%

Germany, 4.0%

Italy, 1.6%

Spain, 0.8%

United Kingdom, 3.3%

Other European Countries, 5.5%

Korea, 6.0%

Thailand, 0.6%

Other Asian Countries, 0.3%

Argentina, 1.1%

Brazil, 6.4%

Venezuela, 1.0%

Other South American Countries, 2.5%

Others, 4.3% GM Financial Services, 0.9%

100%= USD 150. 2 Billion

United States, 52.2%

Canada, 7.0%

Mexico/Other, 1.1%

United Kingdom, 7.0%

Germany, 6.4%

Italy, 2.2%

France, 2.1%

Spain, 1.6%

Russia, 1.4%

Belgium, 0.9%

Other European Countries, 4.3%

Other, 13.8%

100%= USD 136. 2 Billion

GM vs. Ford- Financial Analysis


Key Financial Data

• In the year ended December 31, 2011 the total net sales and revenue for General Motors increased by $14.7 billion (or 10.8%) primarily due to:

– One-time gains of $2.6 billion due to the strengthening of major currencies against the U.S. Dollar.

– Favorable vehicle pricing effect of $1.6 billion due to model year price increases and reduced sales allowances.

– Increased revenue of $0.4 billion due to the acquisition of General Motors Strasbourg S.A.S. (GMS); partially offset by decreased revenue of $1.0 billion due to the sale of Nexteer in November 2010.

• On Contrast, the revenues for Ford increased barely 6% to 136.2 billion from 128.9 billion in 2010.

Summary of Operations 2009 2010 2011y-o-y change (%)

Net Sales and Revenues 104.6 135.6 150.3 11%

Automotive 104.6 135.3 148.9 10%

GM Financial Services - 0.3 1.4 402%

Cost of goods Sold 126 130 145 11%

Operating profit/(loss) before interest income and tax (21) 5 6 11%

Operaing margin -20.0% 3.8% 3.8% 0%

Pretax Income 102 6 6 4%

Net Profit/(loss) 105 5 8 62%

Earnings Per Share

Basic EPS 167.90 3.11 4.94 59%

Diluted EPS 167.82 2.89 4.55 57%

Weighted Average Number of Shares

Basic Shares 623,525,908 1,500,000,000 1,536,000,000

Diluted Shares 623,823,144 1,624,000,000 1,668,000,000

Cash Dividend Declared Per Share 0.00 0.00 0.00

Balance Sheet at the end of the year 2009 2010 2011

Cash and cash equivalents 22.8 26.6 31.6 19%

Property, plant & equipment 18.7 19.2 23.0 19%

Goodwill - - -

Other assets 94.8 93.0 90.0

Total assets 136.3 138.9 144.6 4%

Debt 15.8 4.6 5.3 14%

Other liabilities 98.6 107.5 110.7

Total liabilities 114.3 112.1 116.0 3%

Total shareholders' equity 22.0 26.8 28.6 Net debt (7.0) (22.0) (26.4) 20%

General Motors(USD Billion)

Summary of Operations 2009 2010 2011y-o-y change (%)

Net Sales and Revenues 116.3 129.0 136.3 6%

Automotive 103.9 119.3 128.2 7%

Ford Credit Services 15.9 12.4 9.7 -22%

Cost of goods Sold 119.7 122.3 129.3 6%

Operating profit/(loss) before interest income and tax -3.4 6.7 6.9 4%

Operaing margin -3.0% 5.2% 5.1% -1%

Pretax Income 2.6 7.1 8.7 21%

Net Profit/(loss) 2.7 6.6 20.2 208%

Earnings Per Share

Basic EPS 0.91 1.90 5.33 180%

Diluted EPS 0.86 1.66 4.94 197%

Weighted Average Number of Shares

Basic Shares 2,991,000,000 3,449,000,000 3,793,000,000

Diluted Shares 3,312,000,000 4,178,000,000 4,111,000,000

Cash Dividend Declared Per Share 0.00 0.00 0.05

Balance Sheet at the end of the year 2009 2010 2011

Cash and cash equivalents 42.3 14.8 35.8 142%

Property, plant & equipment 22.6 23.2 22.4

Goodwill - - -

Other assets 127.1 126.7 120.2

Total assets 192.0 164.7 178.3 8%

Debt 131.6 104.0 99.5 -4%

Other liabilities 68.2 61.3 63.8

Total liabilities 199.8 165.3 163.3 -1%

Total shareholders' equity (7,782.0) (642.0) 15,071.0 Net debt 89.4 89.2 63.7 -29%

Ford Group(USD Billion)

GM vs. Ford- Financial Analysis


• GM exhibit tremendous comeback with almost 402% increase in its financial services during 2011 against a decline of 22% in the Ford credit facility primarily reflecting lower repossessions in the United States and lower recoveries in the United States.

• Both GM and Ford reflected higher cost of sales during 2011 by 11% and 6% respectively mainly owing to the higher contribution costs, higher structural costs (including the effect of higher volumes, new product launches, and investments to support the future product, capacity, and brand building plans), higher compensation costs in North America, and unfavorable exchange.

• Ford’s net profit during the year 2011 increased exceptionally by 208% to $20.2 billion or $4.94 per share an improvement of $13.6 billion from 2010. GM net profit increased by almost 52% to $7.5 billion in 2010.

• It’s worth noticing that GM has relatively smaller amount of debt (USD 5.2 billion) to repay against its counterpart Ford, which has nearly USD 99.5 billion of debt as on 2011.

• During the year 2011, GM registered an Return on Equity of 27% compare to 17% in 2010. While, Ford’s ROE has been quite volatile with 134% ROE in 2011 from the decline of nearly 1074% in 2010. Such a volatility in Ford’s ROE elevate concerns over the earnings stability of the company’s going forward.

• During the year 2011, GM reported a diluted earnings per share of $ 4.55 against $4.94 earnings per share reported by Ford Group.

GM vs. Ford- Key Ratios


Sales Growth Return on Equity

Diluted Earnings Per Share Net Debt-to-Equity167.82

2.89 4.550.86 1.66 4.94

2009 2010 2011

General Motors Ford Group

-30%

30%

11%

-19%

11%

6%

2009 2010 2011


477%17%

27%-35%

-1074%

134%

2009 2010 2011


0.72 0.17 0.19

-17.00

-170.19

6.58

2009 2010 2011


Technical AnalysisGM vs. Ford

S&P 500 Auto Index versus GM and Ford – 1 year Share Price Performance

Source: Bloomberg

• During the year 2011, the S&P 500 Auto Index poised a negative return of 28%, amid the concerns of European debt crisis, natural disaster in Japan, Thailand and to the extent the production overcapacity in the recent years.

• However, the industry seems to be recovering with 2011 last three months posting a 15% jump in the S&P 500 Auto Index return vis-à-vis, GM’s return of 2% and Ford’s return of 14%.

• Three months return starting from March 22, 2011 to March 22, 2012 period reflects optimistic comeback in the industry and the top leaders.

• Further, 2012 year-till date returns shows significant positive takeaways in GM’s share price return, which already increased by 19%, much higher than the S&P 500 Auto Index return of 9%.

-

20

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60

80

100

120

140

March-11 June-11 September-11 December-11 March-12

S&P 500 Auto Index (S5AUCO) General Motors (GM) Ford Group (F)

Share Price: $105.313-months return: -7%






Share Price: $87.473-months return: 15%





HOLD/BUY


SELL

Recommendation

By analyzing the industry on various parameters with the help of implementing Fundamental and Technical tools we came to know that this industry has a lot of potential to grow in future. So recommending to invest in Automobile Industry have no doubt is going to be a good and smart option because this industry is booming like never before. The industry trend is much shifting from mature markets towards capturing higher market share in the emerging markets like India and China.

The returns which came out of this industry were very impressive recently, as if we take an example of General Motors it gives approx 21% return in a period of just 3 months despite the fact that company filed bankruptcy under Chapter 11 during the year 2009. General Motor had made a very impressive comeback, which is reflected in the company’s earnings. Additionally, the company has been able to maintain a net cash position of 26.4 Billion in 2011, giving higher confidence to its investors.

While Ford Group fundamentals shows lot of positivity with possibility of growth in future, the numbers that came out during 2011, shows that company is struggling over its Financial Services segment and also sits at a Net Debt position of 63.7 billion.

Through Technical analysis of General Motors and Ford Group it can be recommended that for now General Motor share price shows that it’s a time to hold the position or buy more shares as there is scope in further rise in share prices until and unless any negative reaction or sentiments comes in the Economy.

Investing in General Motors for long time could be a good option whereas in Ford Group there is a chance of getting correction, as the Company is engaged in replacing its older models and rolling out new ones. The costs of doing so are comparatively high, leaving the company with little net profits to book. Pension and health care at United Auto Workers (UAW) are still the major issues that Ford must dealwith. Although the company has undertaken various restructuring initiatives, these are multi-year processes that depend on ongoing labor negotiations with the UAW. These contract negotiations are very critical for the company to remain profitable in the current competitive industry.

So holding the shares of Ford Group for long time could be a wrong step, so at this point of time those who invested earlier can book their profit.

Analyst Profile

Chanderlekha Nayar has a total 5.5 years of experience in Financial and Business Research Domain. Her competencies include Financial Planning & Analysis, Preparation of P&L Statement, Cash Flow Statements and Balance Sheet, Financial modeling, Company Valuation (Discounted Cash Flows, Trading Multiples, Precedent Analysis, NAV calculation), Detail Report Writing, Investment Teasers, Secondary/Business & Market Research, Revenue and Cost Forecasting, Screening and analyzing the Financial Statements and Ratio Analysis.

Currently working with Crisil, as an Investment Research Analyst. Prior to Crisil, she was associated with Evalueserve India Pvt. Ltd, one of the leading knowledge Processing Firm in India. She has pursued her post graduation specializing in Finance from Institute of Management Technology, Ghaziabad.

Documents

March, 2012Global Automotive Industry Top Pick: General Motor versus Ford