GM to replace 24% of volume annually with new models

Article by Anita Panait, on July 24, 2013

General Motors will overhaul its product line in the United States through 2016 with new and redesigned vehicles at a pace at fast as Ford Motor Co., Bank of America Merrill Lynch said in an industry forecast. On average, GM will replace 24 percent of its sales volume annually with new models, a pace that is over double its average in the past two decades.

John Murphy, report author and analyst, remarked that GM’s management has placed more intense focus on product, as seen on the carmaker’s pace and breadth of the portfolio plans. Murphy expects a commitment on GM’s part to pour in $37.2 billion in liquidity into its products, rather than on dividends or share buybacks.

Murphy wrote in the report that it is becoming a more consistent “product churn that bodes well structurally” for GM. The US carmaker is currently implementing an overhaul of its entire truck lineup, which according to analysts will increase GM's bottom line with billions of dollars.

The US carmaker is eyeing another move that might lead to large profits -- a planned big expansion of Cadillac's portfolio. GM is planning to add large rear-wheel-drive sedan into Cadillac's lineup that will compete against rival models like the Mercedes S class.

GM is planning around 10 new or redesigned Cadillac models by mid-2015. According to Morgan Stanley analyst Adam Jonas, expanding Cadillac's portfolio and shifting the luxury brand up the luxury chain to compete against German rivals "can seriously move the needle" on profits.

Topics: gm

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