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GM Gears Up Ontario Plant

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General Motors Company (GM - Free Report) plans to spend C$250 million ($243.46 million) for gearing up its CAMI Automotive Inc. assembly plant in Ingersoll, Ontario for future production. Currently, the plant produces well-known Chevrolet Equinox and the GMC Terrain crossovers utility vehicles.

CAMI is currently operating at full capacity. As a result, the plant has been sending some vehicles to GM’s Oshawa, Ontario plant to finish assembly work.

Currently, crossover utility vehicles occupy the lion’s share in the U.S. market. More than 80% of vehicles produced in Canada are shipped to the U.S. and crossovers constitute roughly 40% of automobile production in Canada.

GM’s investment in CAMI facility is part of the $1.5 billion GM committed to invest in its North American plants in 2013 as part of its $8 billion annual investment plan for its global operations for new vehicle development.

GM has invested $10.2 billion in its North American facilities since 2009. GM aims to boost market share and increase vehicle pricing in North America. The company expects to enhance profit margins in the region to 10% in the next three or four years from 8% currently.

Meanwhile, the company has targeted break-even results in Europe by 2015. In China, GM intends to improve margins by continuing investing in Cadillac and rolling out its OnStar communications, in-car safety system.
Recently, at an industry conference in Detroit, GM stated that it expects modest growth in global auto sales in 2013 as improvements in China and the U.S. will be offset by sluggish car sales in Europe. The automaker predicted a 5% rise in industry sales in the U.S. and international market each and European market to shrink 4% in the year.

The company foresees pricing pressures to exist, particularly in China and Europe. However, it expects that moderate market share gain across the world, driven by new vehicle launches, will boost its profit margins. GM plans to upgrade 70% of its global lineups by the end of this year.

GM, a Zacks Rank #3 (Hold) stock, posted higher profits of $0.8 billion or 48 cents per share in the fourth quarter of 2012, compared with $0.7 billion or 39 cents in the same quarter of 2011. However, earnings missing the Zacks Consensus Estimate by a penny. The results excluded net gain from special items of $0.1 billion or 6 cents in the 2012-quarter and net loss from special items of $0.2 billion, or 11 cents in the 2011-quarter.

Revenues in the quarter scaled up 3.4% to $39.3 billion, which was higher than the Zacks Consensus Estimate of $38.6 billion. Unit sales escalated 4.2% to 2.3 million vehicles. The automaker occupied a market share of 11.5% during the quarter, down from 11.6% in the year-ago quarter.

GM expects to boost its top-line in 2013 with the help of new vehicle launches. At the same time, the company believes cost control measures will boost its bottom line growth. It expects 2013 capital expenditures to be at the 2012-level.

Few stocks that are performing well in the industry where GM operates include Gentherm Incorporated (THRM - Free Report) , STRATTEC Security Corporation , and Oshkosh Corporation (OSK - Free Report) . Both Gentherm and STRATTEC carry a Zacks Rank #1 (Strong Buy) while Oshkosh retains a Zacks Rank #2 (Buy).

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