Good news at GM does not mean company is yet on solid ground

(August 15, 2010) With General Motors announcement of impressive profit during the second quarter, presents the following data points:

    • Today most GM vehicles sell for an average of 15.7 percent off sticker price; the industry average is 13.7 percent. During first quarter, GM's discount was 13.9 percent and the industry's was 13.2 percent. In second quarter of last year, GM's discount was 16.6 percent and the industry's was 15.5 percent.

    • GM dealer inventory is at 47 days to turn, down from 53 in first quarter and from 117 in the second quarter of last year.

    • GM's True Cost of IncentivesSM for second quarter is $3,691 per vehicle sold; the industry average is $2,672. GM's incentives have climbed an average of nearly $400 per vehicle since first quarter of this year while the industry average rose only $66 per vehicle sold. This time last year, GM incentives averaged $776 higher than industry average; currently GM averages $1,018 higher.

    • Of all new GM financing deals, 14.8 percent are leases; this is the highest lease penetration rate for GM since July 2008.

    • Consideration and purchase intent for GM have recently been stable.

GM earnings are being announced amidst much speculation that the company will file for its initial public offering (IPO) within the coming days.

"While the company has good news today, it's hard to look at this data and see a definitive trend. Reestablishing credibility is achieved quarter by quarter," commented CEO Jeremy Anwyl, who explores the rush to IPO in his blog
Just to Clarify.

"They've done a good job one year out of bankruptcy, but the job is not done and competition from Ford, Hyundai, Volkswagen and others is getting more intense."

"We owe GM some credit for coming out of bankruptcy with flying colors, but that really won't matter much if they don't get other elements of their business right," stated Senior Analyst Michelle Krebs who covers this topic in her report at