GM’s Q3 sales were up 6.3%, but that was short of analysts’ estimates.
Negotiations between the United Auto Workers and General Motors Co. have failed again to make much headway towards a settlement even as the two sides continued to look for a way out of the morass that has led to longest nationwide strike against GM in nearly 50 years.
Discussions have continued since the UAW rejected GM’s latest proposal but some of the energy seems to have gone out of the talks. The UAW’s bargaining methodology requires union negotiators to remain at the table when it has members on the picket lines even when talks seem to be going nowhere.
Meanwhile, GM shares traded lower after the automaker reported sales for the third quarter grew by 6.3% but the sales increase failed to meet analysts’ consensus, Market Watch noted. The expectations were that GM’s sales would grow by 7.8% and the watchers are adjusting their expectations.
(Big Three Q3 Sales: Ford Down, FCA Even, GM Up)
The results combined with the ongoing talks with the UAW not yielding much has at least one analyst, CFRA’s Garrett Nelson, to continue rating GM stock as a “sell,” cutting his target price by $3 down to $32 a share.
Chevy Silverado sales combined with GMC Sierra surpassed F-150 sales during the third quarter.
“The sales report comes at a time when the UAW strike has entered its third week,” Nelson wrote in an note to investors. “While it is difficult to discern how much progress is being made surrounding the host of issues being negotiated, with both parties now feeling greater financial pain, we think the two sides will reach an agreement sometime in the next couple of weeks.
“Earlier this week, GM idled a plant in Mexico due to a parts shortage. We think the shortage could escalate pressure from dealerships unable to complete repairs in their highly profitable Parts & Service operations (new vehicle inventories are still ample).”
Despite the headline miss, GM picked up U.S. market share in the quarter as Ford Motor Co. sales dropped 4.9% and Fiat Chrysler Automobiles remained flat for the same period.
(New Vehicle Sales in U.S. Take Hit in September)
But GM’s principal brand, Chevrolet, remained mired in third place in the critical pickup truck market, trailing behind FCA’s Ram brand. GM touted the fact that its Chevrolet and GMC brands combined to outsell the Ford F-150.
GM’s edge was small and Ford plans to introduce and updated version of Heavy-duty F- series trucks soon. Overall, GM also appeared to be backing away from its optimistic projections that its sales of light truck would benefit from a strong economy
UAW picketers have been told to be prepared to stay out on strike for a while.
In July, GM noted the U.S. light-vehicle SAAR for the first half of the year is expected to be a healthy 17 million and continues to grow at a healthy pace.
“Jobs are plentiful, and inflation remains low,” said GM’s chief economist, Elaine Buckberg, who echoed the company’s optimistic outlook for the second half of the year.
(Costs Mounting for GM as UAW Strike Closes Profitable Truck Plant in Mexico)
“Auto demand was better than anticipated in the first half and we expect strong performance in the second half of the year. If the Fed cuts rates, as widely expected, lower financing costs will provide further support to auto sales,” Buckberg said prior to the strike, which crippled GM’s production.