Honda Motor Co Ltd (ADR) (HMC), General Motors Company (GM): A Few Leading Car Makers to Consider

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The American leader

General Motors Company (NYSE:GM) filed for bankruptcy in 2009. Since then, much has happened: restructuring, a government bailout, job-cuts, dealership reduction, and reduction in brands. Many remain hopeful the giant will promptly recover and look for evidence on profit reported since 2010. Also, expansion into the Chinese market is fueling positive prospects.

As many other important companies, General Motors Company (NYSE:GM) has focused on the developing world in order to exploit market potential and boost sales. For the same reason, the company has entered the Chinese market, and developed expansion plans for Indonesia and Thailand. Worldwide, the firm is pumping money to improve its products.

General Motors Company (NYSE:GM)’s stock price has accompanied the general market drop in the last few days. Trouble does not end there since the Eurozone is still to find a steady recovery path. Additionally, debt levels have been increasing and net cash flow suffered a great reduction.

Despite its alluring valuation at 8 times its earnings, it is recommended to hold on account of the company’s fragile financial standing and the increasing competition it faces in the developing markets.

Bottom line

The Detroit car makers had passed another dark moment in history. Compared to the 1970’s, the Detroit firms today face greater and more successful competition. Also, recovery has proved harder, and future remains uncertain. For all that, buying the stock of General Motors Company (NYSE:GM) is not recommended. If you’re looking for a sure long-term investment, buy the stock of Honda Motor Co Ltd (ADR) (NYSE:HMC) or VW.

The article A Few Leading Car Makers to Consider originally appeared on Fool.com and is written by Victor Selva.

Victor Selva has no position in any stocks mentioned. The Motley Fool recommends General Motors. Victor is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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