In the manufacturing of vehicles, the companies have to look forward because it takes time to retool a plant to churn out vehicles to meet customers demand. According to Nick Carey and Joseph White of Reuters, GM recently reported in expects sales in 2018 to be similar to 2017, but the big year will be 2019. The average American consumer continues to buy pickups, SUVs and crossovers and by 2019 those vehicles will have been retooled so they will produce higher margins for GM.

The higher margins come from increased production of higher priced 4 door crew cab trucks and expanded sales of luxury truck models. The Denali line of trucks with an average price of $55,600 is higher than Mercedes Benz and Cadillac.

GM will increase investments in electric models (the auto industry believes 95% of vehicles selling by 2025 will be internal combustion and by 2030 electrical vehicles rises to over 10%.)

GM did not have billions of money offshore so will be giving employees bonuses other than the normal profits sharing pay formulas.

If you own a GM product and it is slow selling, GM will quickly replace slow selling sedans.

Linking to dividend paying stocks, in the 1900’s what happened in Detroit first with Ford and then GM had a large affect on the national economy. The car companies are still important, but as robots replace humans the affect on states and cities to have an auto plant in their community is lessened. There would still be large interest, but not nearly as much as Amazon had for its new headquarters. The world changes and investors must change with it. Autos and the industry are still important but it is easy to have alternatives. Keep the old companies, but watch the risk reward equation.

There are more questions than answers, till the next time – to raising questions.