GM stock decline is another issue Mary Barra has to deal with

Article by Andrew Christian, on March 28, 2014

The massive recalls that recently hit General Motors Co. are surely a source of headache for new chief executive Mary Barra. But it looks like she has other things to worry – a decline in GM’s stock. GM shares dropped almost 14 percent since Barra took over as CEO Jan. 15 through March 25, while the Standard & Poor’s 500 Index has surged in the period.

Just after becoming the top executive at GM, Barra started recalling 1.6 million small cars over faulty ignition switches, which are linked to 12 deaths. Barra’s problems do not end with that, as she also to stop GM’s financial bleeding in Europe while handling currency fluctuations in South America. She also has to place barrier against Volkswagen AG in China while trying to overcome a slow start to 2014 sales in the United States.

Matt Stover, an analyst with Guggenheim Securities LLC, said in a telephone interview. Matt Stover, an analyst with Guggenheim Securities LLC, told Bloomberg in a telephone interview that the drop in GM’s stock has more to do with the fundamentals than the recalls.

The carmaker has been seeking to benefit from the launch of 18 new or refreshed vehicles in the US in 2013, but sales of the redesigned Chevrolet Silverado full-size pickup dropped in the first two months of 2014.

GM’s luxury brand Cadillac, posted a 7.9-percent drop in sales in the first two months of February of 2014. GM has already lost over $18 billion in Europe since 1999 and is trying to post a breakeven by mid-decade. It new strategy has GM withdrawing its Chevrolet brand from Europe to better position its Opel brand against Volkswagen. GM is also shutting down its Bochum site in Germany.

Topics: gm, mary barra, ceo

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