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Old 02-16-2012, 11:35 AM   #1
Indocti Discant
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Default GM 2011 results, 2012 outlook

http://investor.gm.com/news-article...._earnings.html

Quote:
GM Reports 2011 Net Income of $7.6 Billion

Thu, Feb 16 2012

  • Full-year EBIT-adjusted of $8.3 billion, up $1.3 billion from 2010
  • Fourth quarter net income of $0.5 billion and EBIT-adjusted of $1.1 billion

DETROIT – General Motors Co. (NYSE: GM) today announced 2011 calendar-year net income attributable to common stockholders of $7.6 billion, or $4.58 per fully diluted share, up from $4.7 billion, or $2.89 per fully diluted share, in 2010.
Revenue increased 11 percent to $150.3 billion, compared with $135.6 billion in 2010. Full-year earnings before interest and tax (EBIT) adjusted was $8.3 billion, compared with $7.0 billion in 2010.
“In our first full year as a public company, we grew the top and bottom lines, advanced our global market share and made strategic investments in our brands around the world,” said Dan Akerson, chairman and CEO. “We will build on these results as we bring more new cars, crossovers and trucks to market, and make GM a far more efficient global team. This includes reducing our break-even level in Europe and South America and driving higher revenues around the world.”

Fourth Quarter Results
Revenue in the fourth quarter of 2011 increased 3 percent to $38.0 billion, compared with the fourth quarter of 2010. GM’s fourth quarter 2011 net income attributable to common stockholders was $0.5 billion, or $0.28 per fully diluted share, including a net loss from special items of $0.2 billion or $0.11 per fully diluted share.
In the fourth quarter of 2010, GM’s net income attributable to common stockholders was $0.5 billion, or $0.31 per fully diluted share, including a net loss from special items of $0.4 billion or $0.21 per fully diluted share.
EBIT-adjusted was $1.1 billion in the fourth quarter of 2011, compared with $1.0 billion in the fourth quarter of 2010. Fourth quarter EBIT-adjusted for 2011 includes the impact of restructuring charges of $0.3 billion.
GM’s fourth quarter 2011 special items include impairment charges related to goodwill and GM’s investment in Ally Financial, and gains related to the Canadian Health Care Trust (HCT) settlement, the reversal of deferred tax asset valuation allowances in Australia and the extinguishment of debt.
Regional Results
  • GM North America (GMNA) reported EBIT-adjusted of $1.5 billion in the fourth quarter of 2011 compared with $0.8 billion in 2010. Full-year EBIT-adjusted was $7.2 billion in 2011 compared with $5.7 billion in 2010. Based on GMNA’s 2011 financial performance, the company will pay profit sharing of up to $7,000 to approximately 47,500 eligible GM U.S. hourly employees. The full payout will be paid to employees who had 1,850 or more compensated hours in 2011.
  • GM Europe (GME) reported an EBIT-adjusted loss of $0.6 billion in the fourth quarter of 2011, including $0.2 billion of restructuring costs, matching last year’s results. Full-year EBIT-adjusted was a loss of $0.7 billion in 2011, an improvement of $1.3 billion over 2010.
  • GM International Operations (GMIO) reported EBIT-adjusted of $0.4 billion in the fourth quarter of 2011 compared with $0.3 billion in 2010. Full-year EBIT-adjusted was $1.9 billion in 2011 compared with $2.3 billion in 2010.
  • GM South America (GMSA) reported an EBIT-adjusted loss of $0.2 billion in the fourth quarter of 2011, including $0.1 billion in restructuring costs, compared with EBIT-adjusted of $0.2 billion in 2010. Full-year EBIT-adjusted was a loss of $0.1 billion in 2011 compared with EBIT-adjusted of $0.8 billion in 2010.
Cash Flow and Liquidity
For the fourth quarter of 2011, automotive cash flow from operating activities was $1.2 billion and automotive free cash flow was $(0.9) billion, which includes the previously announced $0.8 billion contribution to the HCT.
GM ended the year with strong total automotive liquidity of $37.5 billion compared with $33.5 billion in 2010. Automotive cash and marketable securities was $31.6 billion compared with $27.6 billion at the end of 2010.
U.S. Pension Update
GM’s U.S. defined benefit pension plans earned asset returns of 11.1 percent in 2011. They ended the year 88 percent funded, largely unchanged from 89 percent funded a year ago.
The company also announced today that it is taking further steps toward its goals of de-risking and fully funding its U.S. pension plans. Effective Sept. 30, 2012, GM will freeze its defined benefit pension plan for U.S. salaried employees, who instead will receive contributions to a defined contribution plan, or 401(k). This initiative will affect GM's U.S. salaried employees hired prior to Jan. 1, 2001. Salaried employees hired after that date are already covered by a defined contribution plan.
2012 Outlook
Looking forward, GM expects to increase its top-line revenue year-over-year in an expanding global automotive industry. In addition, GM expects continued pricing improvement with cost inflation well contained, while product mix and pension expense are expected to be unfavorable.
Capital spending in 2012 is expected to be in the range of $8 billion as the company continues to aggressively invest in new products and technologies.
“We are executing an aggressive product plan that will give customers around the world even more reasons to purchase a General Motors vehicle,” said Dan Ammann, senior vice president and CFO. “Behind the scenes, we are working hard to eliminate complexity and cost throughout the organization to increase margins in all of our regions, and return Europe and South America to profitability. Overall, we have made good progress and we have more work to do.”
My key takeaways

  • Underfunded pension is not worsening... freezing of all pension obligations should help improve the gap
  • looks as if ROW is much worse than expected and will take some time to return to profitability. Europe is a major unknown.
  • free cash flow could be better, the $800mm towards healthcare took a massive chunk out of it
  • profitability is impressive given the mix shift towards cars away from suvs
  • vehicle prices (might) rise to help improve margins
  • NA employees to get $7k profit sharing bonuses
  • 4Q results were slightly disappointing and lack of details on 2012 estimates leave things murky
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Old 02-20-2012, 04:40 PM   #2
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Bring us some more euro models GM... Do it. Are you not learning anything from Ford? What was the other fantastic Aussie car you gave us for a minute under Pontiac? The G something?
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Old 02-20-2012, 04:49 PM   #3
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Bring us some more euro models GM... Do it. Are you not learning anything from Ford? What was the other fantastic Aussie car you gave us for a minute under Pontiac? The G something?
To be fair, sales of both the GTO and G8 were underwhelming for such a great car. Bringing European models isn't always the answer. Check the 47% fleet sales of the new Focus.
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Old 02-21-2012, 12:31 AM   #4
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To be fair, sales of both the GTO and G8 were underwhelming for such a great car. Bringing European models isn't always the answer. Check the 47% fleet sales of the new Focus.
Aussie and Euro models are often wasted on the American masses. They simply don't understand them. It's no wonder we get stuck with one tiresome rehash after another.
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Old 02-21-2012, 10:32 AM   #5
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To be fair, sales of both the GTO and G8 were underwhelming for such a great car. Bringing European models isn't always the answer. Check the 47% fleet sales of the new Focus.
The GTO was a sales failure because the debuted with the wrong engine, and it had that silly gas tank/trunk. The G8 really didn't have time on the market to judge, but it wasn't like there were a bunch sitting on lots.

As far as euro models, they are a tuff sell. The require a cost premium at a smaller given size. The cost premium can be absorbed by luxury marques like BMW/MB/Audi. VW trades on a bit of brand image as well. But just bringing a base model, like the Astra is difficult because of value/size and the diparity of manual/automatics chosen between US and EU. This may change with the proliferation of DCT.

Last edited by Derbagger; 02-21-2012 at 04:47 PM.
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Old 02-21-2012, 10:39 AM   #6
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holy moral hazard, batman
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Old 02-21-2012, 02:10 PM   #7
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Having had nothing but horrible dealings with all aspects of GM, from their sales network, to their warranty department, all the way through to OnStar, I'm shocked as to how these people are making so much money.

Maybe that old Simpsons episode with Homer's brother was right?
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Come on Homer, there is at a maximum only forty dollars worth of steel in each of these things! So which one do you want?
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Old 02-21-2012, 05:07 PM   #8
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holy moral hazard, batman
If you want to discuss politics perhaps you could go somewhere else or actually try and make sense. Either would be an improvement.
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Old 02-21-2012, 05:21 PM   #9
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Except all of the dealer inventory has been booked as revenue. Inventories have risen 72,000 units year on year... What is the current throughput of this inventory? Back that out and it might give a more accurate picture of 2011.
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Old 02-21-2012, 07:25 PM   #10
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Except all of the dealer inventory has been booked as revenue. Inventories have risen 72,000 units year on year... What is the current throughput of this inventory? Back that out and it might give a more accurate picture of 2011.
Jan 2012 SAAR was 14.1mm. That's pretty healthy. It's a rising sales environment, so a rise in inventories isn't a bad thing in this case.
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Old 02-21-2012, 07:52 PM   #11
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Jan 2012 SAAR was 14.1mm. That's pretty healthy. It's a rising sales environment, so a rise in inventories isn't a bad thing in this case.
I remember some good discussions we had about this in a prior thread - I'm still skeptical about inventories even given the SAAR, but I of course wish GM success.
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Old 02-21-2012, 08:29 PM   #12
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I remember some good discussions we had about this in a prior thread - I'm still skeptical about inventories even given the SAAR, but I of course wish GM success.
that discussion unfortunately met a sad end b/c of my injury.

but.. to rehash. in a rising sales environment (which is what we are in and is forecasted) you need rising inventories to meet demand. If the vehicle needed isnt in stock (or available rather quickly) a sale will be lost. Hence why an inventory days supply of 60-90 is considered healthy.

As long as you don't see them behaving stupid (like they did with their truck production earlier last year) their rising inventory rate should not be an issue.
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Old 02-21-2012, 08:44 PM   #13
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that discussion unfortunately met a sad end b/c of my injury.

but.. to rehash. in a rising sales environment (which is what we are in and is forecasted) you need rising inventories to meet demand. If the vehicle needed isnt in stock (or available rather quickly) a sale will be lost. Hence why an inventory days supply of 60-90 is considered healthy.

As long as you don't see them behaving stupid (like they did with their truck production earlier last year) their rising inventory rate should not be an issue.
Agreed, but that is taking their SAAR numbers for granted... I would dig deeper into the number to make sure there is no eye-covering wool... and where is the finance side reported - is it in GM's numbers or elsewhere? 0% for 72 mos for what seems like forever now...
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Old 02-21-2012, 10:02 PM   #14
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Agreed, but that is taking their SAAR numbers for granted... I would dig deeper into the number to make sure there is no eye-covering wool... and where is the finance side reported - is it in GM's numbers or elsewhere? 0% for 72 mos for what seems like forever now...
the financing aspect is no longer a part of GM. GM financial i.e GMAC was sold off a long time ago an has undergone several changes. (hint Ally bank).

the reported SAAR numbers are facts. If the trend is rising then you do all sorts of extrapolation and wizardry and come to a logical forecast.

I'm not sure there is any wool being pulled over the eyes of people here. Unless you believe that dealers are being forced to take on vehicles that they don't necessarily want.
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Old 02-22-2012, 12:07 AM   #15
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Unless you believe that dealers are being forced to take on vehicles that they don't necessarily want.
I guess unless someone on here owns a dealership we can't answer that one -

Do you know how they pull off the 0% if they are not the one's doing the financing anymore? Where is the bank's end coming from?
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Old 02-22-2012, 07:15 AM   #16
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For some reason I was under the impression GM tried to get some sort of foothold back in financial. Did they?
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Old 02-22-2012, 11:44 AM   #17
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I guess unless someone on here owns a dealership we can't answer that one -

Do you know how they pull off the 0% if they are not the one's doing the financing anymore? Where is the bank's end coming from?
If this is indeed happening it tends to come out in automotive media.

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For some reason I was under the impression GM tried to get some sort of foothold back in financial. Did they?
facepalm myself. This is correct, they bought Americredit which is a subprime lender.

The 0% financing aspect is an interesting game. It really only applies to those with good credit. It is often paired with a higher sale price vs. a lower price if you accept the higher rate / rebate. Given where the cost of financing is right now.... lending at 0% is not a massive hit since borrowing costs are under 1%.

http://www.bloomberg.com/news/2012-0...t-markets.html
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Old 02-23-2012, 04:49 AM   #18
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I guess unless someone on here owns a dealership we can't answer that one -

Do you know how they pull off the 0% if they are not the one's doing the financing anymore? Where is the bank's end coming from?

Michael A. Carpenter has spent a lot of time chatting up car dealers lately. In mid-February, the Ally Financial chief executive officer met with dealers in Dallas and Houston to tell them that the former General Motors (GM) subsidiary, once called GMAC, will be able to take care of their funding needs for years. Ally, which is eyeing a second-quarter initial public offering, has a strong balance sheet, he said. And as a deposit-taking bank, it can raise funds more cheaply than nonbank rivals. He made a similar pitch at a dealer convention in San Francisco the week before. "They're trying to get the dealers on their side," says Tom Durant, owner of Classic Chevrolet in Grapevine, Tex., who was at the Dallas meeting.

Courting dealers is a wise move, given what GM is up to these days. The resurgent automaker has been expanding its own lending operations, offering leases and subprime loans to help sell more cars. Ally makes auto loans to consumers and helps dealers finance their inventories. GM's dealers, as a group, are its largest customer. So the automaker's heightened interest in lending could complicate Ally's IPO plans.

Other banks are also getting more aggressive in auto finance. According to Experian Automotive, banks' share of auto finance increased to 36.6 percent in the fourth quarter of 2010, from 32.8 percent a year earlier. The relationship with GM "is an important and mutually beneficial strategic alliance," says Ally spokeswoman Gina Proia.

In 2006, GM spun off 51 percent of its financing unit, General Motors Acceptance Corp. GMAC changed its name to Ally last year. The U.S. Treasury owns 73.8 percent of Ally as a result of its $17.2 billion bailout of the lender. GM, which is 33 percent owned by the Treasury, still owns 10 percent of Ally.

Carpenter will have to explain to potential investors how Ally will retain its GM business even as the carmaker is looking at other options. "The No. 1 question Ally will have to answer ... is how they can go public if their No. 1 customer is moving away from them," says Maryann Keller, who runs consulting firm Maryann Keller & Associates in Stamford, Conn. "They're going to have to tell a story about what their business model is going to be."

It's no secret that GM executives want to give customers more borrowing options as a way to spur sales. Since emerging from bankruptcy in July 2009, GM has trailed rivals—most of whom own an in-house lender—in selling cars to consumers with subprime credit and in leasing. That's why GM bought Fort Worth subprime lender AmeriCredit in July and renamed it GM Financial. The unit more than doubled loan origination in the fourth quarter, to $935 million. "We're beginning to close this [gap] because we have competition between GM Financial and Ally," GM North American President Mark L. Reuss said at a January investor conference, noting that the presence of GM Financial was spurring Ally to make more subprime loans.

GM doesn't want to drive Ally out of the business. Its dealers rely on Ally to lend to their customers. More important, Ally provided 82.1 percent of the money GM dealers used to stock showrooms in the fourth quarter—so-called floor-plan loans. Currently, Ally offers dealers rates as low as 2.25 percent on such loans, says Durant, the dealer in Grapevine. With a junk credit rating and no access to bank deposits, GM would have a hard time offering such low rates, Keller says.

At the same time, GM is starting to boost its leasing and subprime lending. GM Financial started a trial leasing program in Ohio in December and expanded it to seven Northeastern states in January, GM Vice-President of U.S. Sales Don Johnson said on Feb. 1.

As the two companies become more competitive in retail lending, GM has pondered a foray into floor-plan financing, says Duane R. Paddock, owner of Paddock Chevrolet in Kenmore, N.Y., and co-chairman of GM's National Dealer Council. GM has told its dealers that in the long run it may be able to finance inventory. "We have assumed that GM Financial would become a floor-plan source," says Paddock. Although "it's not going to happen anytime soon."

GM executives worry that if credit markets freeze again, their dealers could have a hard time getting financing. "If there's a disruption in the wholesale finance business, that creates a lot of risk for the company," GM Vice-Chairman Stephen J. Girsky told analysts in February. The automaker made overtures to buy a piece or all of Ally but was rebuffed last year, say two people familiar with the matter. Since industrial companies cannot own a bank holding company, if GM were to buy Ally it would have to sell Ally's bank and mortgage business.

As GM moves in, Ally is diversifying. The company, which already does a lot of business with Chrysler dealers and tiny Saab, wants to work with other brands as well. And Carpenter's campaign is getting some traction with dealers. "When the going got tough, a lot of banks got out of floor-plan lending," says Fort Worth dealer James Hardick, an owner of Moritz Chevrolet and Moritz Chrysler Jeep Dodge. "The only financing available was GMAC. A lot of dealers will be loyal to them."



The bottom line: Moving toward an IPO, Ally is shoring up its relations with dealers and drumming up new business as GM expands its financing efforts.
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Old 02-23-2012, 09:21 AM   #19
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If you want to discuss politics perhaps you could go somewhere else or actually try and make sense. Either would be an improvement.
unfortunately, it has become impossible to discuss corporate finances without some sort of political intrusion. of course, governance has always played a role, but now it is central.

i guess we're still on the out's, though. is that why i didn't get flowers for valentine's day?
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Old 02-23-2012, 11:47 AM   #20
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So, based on Avanti's article, GM cut GMAC which is now Ally, funded mostly by the treasury and trying to go public, while GM tries to re-create another GMAC and compete directly with Ally. Unless there are contradicting facts, Ally is completely at GM's mercy, yet they both need success to pay back the treasury. Conflict of interest to say the least. So, as patriots, we all need to buy ZR1's and finance them through Ally - pre-approval notices will be in the mail with your tax returns...
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Old 02-23-2012, 03:45 PM   #21
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So, based on Avanti's article, GM cut GMAC which is now Ally, funded mostly by the treasury and trying to go public, while GM tries to re-create another GMAC and compete directly with Ally. Unless there are contradicting facts, Ally is completely at GM's mercy, yet they both need success to pay back the treasury. Conflict of interest to say the least. So, as patriots, we all need to buy ZR1's and finance them through Ally - pre-approval notices will be in the mail with your tax returns...


Well Americredit is mostly subprime and doesnt have the size to compete with Ally for the majority of sales. Americredit might encroach a bit on Ally sales, but i dont see them really taking much of Ally's lunch.
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Old 03-01-2012, 12:57 PM   #22
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Feb inventories up 7.5% to 667K, highest since BK - and after a 1.1% reported increase in sales. Since sales are reported when made to the dealer, and inventories are reported at dealers, where were those sales? Is that to imply that dealers really wanted an inventory increase of 8.6% but they just couldn't keep the cars on the lots?
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Old 03-02-2012, 11:43 AM   #23
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Feb inventories up 7.5% to 667K, highest since BK - and after a 1.1% reported increase in sales. Since sales are reported when made to the dealer, and inventories are reported at dealers, where were those sales? Is that to imply that dealers really wanted an inventory increase of 8.6% but they just couldn't keep the cars on the lots?
Correction, revenue is recognized when delivered to a dealer. The sales number (i.e. vehicle sold) is an actual delivery to a customer (fleet or retail).

Soooo.... what happened was that GM pushed off more inventory than the dealers sold in the month. As you have already expressed this is a negative sign, especially given their 80 DSO (cars) and 116 DSO (suvs). The offset to this is a continuing (monthly) increase in SAAR, and the spring-summer seasonality (highest SAAR months). Hence GM has ramped up inventory for the extra demand that is fore-casted in the coming months.
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Old 03-02-2012, 12:07 PM   #24
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Soooo.... what happened was that GM pushed off more inventory than the dealers sold in the month.
If you were to draw a trendline over monthly inventories since the BK, it would be rising at what looks to be a 40 degree angle. When will this level off? It seems like it is being continually justified by more and higher projections.
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Old 03-02-2012, 12:25 PM   #25
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If you were to draw a trendline over monthly inventories since the BK, it would be rising at what looks to be a 40 degree angle. When will this level off? It seems like it is being continually justified by more and higher projections.
It should level off once SAAR levels off. With the exception of an anemic economy and the high gas price kicker every indication points towards a continuously increasing SAAR.
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