GM Europe Faces Challenge To Its Strength --- Aging Lines, Competition Cut Into Market Share In the Third Quarter
The highly profitable European unit that helped prop up General Motors Corp. during the recent U.S. recession suddenly doesn't look so invincible.</br></br>With some aging product lines in key segments and tougher competition in Germany, France and Italy, GM's European unit lost market share in the third quarter, slipping to 11.8% from 13.1%. During the first nine months of the year, GM Europe's sales volume grew, but trailed the market as a whole. Among GM's new problems in Europe, where it has led rivals in controlling costs, is a resurgency among Ford Motor Co., Volkswagen AG and Fiat SpA.</br></br>The setbacks in Europe, which GM maintains are only temporary, couldn't come at a worse time. As its third-quarter results indicate, GM is undergoing a long, slow turnaround in North America. Although the auto maker narrowed its loss in North America, it still was $296 in the red for each vehicle sold. By contrast, Chrysler Corp., which posted record earnings for the quarter, had a profit of $1,000 for each vehicle.</br></br>Investors continued to punish GM's stock Friday, a day after the company reported its disappointing third-quarter results. It fell $1.875 a share, or 4.4%, to close at $41.25 in New York Stock Exchange composite trading.</br></br>More analysts lowered their estimates for the next couple of quarters, saying GM's cost-cutting efforts may have plateaued. As a result, they said, it is unlikely that GM's debt ratings, which trail those of its domestic rivals, will be upgraded anytime soon.