Ford, GM feel Europe's economic pain

The automakers are experiencing tough times at home and abroad, but there may be some light at the end of the tunnel.

By Benzinga Jun 8, 2012 1:30PM
Image: Couple shopping for car (© Image100/Jupiterimages)By Katey Stapleton, Benzinga Staff Writer


Ford (F) and General Motors (GM) are gearing down for potentially disappointing revenues -- and this time around, the bad news is coming from overseas. 


Just as Europe undoubtedly felt the backlash from America's economic crisis, American companies are now feeling pain as a result of Europe's troubles. 


According to Reuters, Ford will likely lose between $500 million and $600 million in Europe alone this year. The company came to this realization when updating its internal five-year plan. Meanwhile, GM is striving to bump up sales elsewhere, particularly in China, in an effort to offset its losses in Europe. 


In addition to buying fewer cars, Europeans are replacing fewer car parts as well, as they tighten their belts in uncertain times. As the debts of countries such as Greece and Spain continue to deplete investor confidence, customers of both automakers will likely remain strapped for cash.


Neither Ford nor GM can afford to deal with any more disappointment. According to Jefferies, May was not a particularly glamorous quarter for automakers in the U.S.


"May's U.S. light vehicle SAAR of 13.7mn missed consensus by 5% and was the first month below 14.0mn this year. That sales missed so widely is concerning given a handful of auto-centric tailwinds in May. Strong auto sales had previously been a key macro highlight. Unfortunately, May's results were befitting of Friday's weak jobs report and followed weaker Chicago PMI, China PMI, and int'l airfreight data, making it a 'weak week' overall," Jefferies said on Monday.


 However, there is light at the end of the seemingly endless tunnel. Morgan Stanley believes GM's management is on the right track in terms of execution and strategy, with small wins building up confidence and credibility.


Ford's fate is not yet sealed either. Despite a rocky month, May sales were still up 13% over this time last year.

 

GM is currently trading at $22, up about 7% year-to-date, while Ford is at $10.60, down around 2.5% year-to-date.


More from Benzinga


0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

112
112 rated 1
270
270 rated 2
444
444 rated 3
693
693 rated 4
637
637 rated 5
692
692 rated 6
615
615 rated 7
498
498 rated 8
265
265 rated 9
126
126 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.