Europe Won't Save General Motors

The car market may be hurting in the United States, but sales in Europe are booming
for at least one U.S. company.
General
Motors (NYSE: GM) reported record sales of nearly 1.2 million vehicles in Europe
for the first six months of the year. Sales grew 58% in Eastern Europe and 60% in
Russia, which offset a weaker market in Spain and Italy.
General Motors has been struggling in the United States recently thanks to a slowdown
in the housing market and consumer spending. The result has been an environment where
consumers are pinching pennies and loans are difficult to obtain even for qualified
buyers. As a result, GM has cut many jobs and taken other measures to reduce costs
to salvage its earnings.
The Wall Street Journal also published an interesting piece today pointing out the
only way for General Motors to emerge from this mess may be bankruptcy. The automaker
is not only too large right now, but also employs too many people in too strong of
a union. These are problems that aren't easy to circumvent, especially when it needs
$15 billion just to make it to 2010.
General Motors shares are down more than 70% during the past 52-weeks and continue
to struggle. European sales may be doing very well these days, but the market is simply
too small to make a material difference. And a turnaround in the way it operates in
the United States may be too costly to undertake and too difficult with unions.
Related Companies
Toyota Motor Corporation (TM)
Ford Motor Company (F)
Honda Motor Co. Ltd. (HMC)
American Axle (AXL)
Diamler AG (DAI)
Nissan Motor Co. Ltd. (NSANY)
PACCAR Inc. (PCAR)

The above story is the opinion of the author only and it does not reflect
iStockAnalyst opinion. Further, the author is not personally advising you
regarding the suitability of the story for your investment needs. In no event
iStockAnalyst will be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage
whatsoever arising from or arising out of, or in connection with the use of this
information. Please consult your investment advisor before making any investment
decision.