General Motors Stuck In Reverse

General Motors (GM) shares currently rate a Sell with a six-month target price of $4.00. Along with other original equipment manufacturers (OEMs) such as Ford (F) and Chrysler, GM is being pressed by industry-wide manufacturing overcapacity.

The company is at a disadvantage compared to its competitors, owing to huge pension and healthcare costs. GM provides pension, healthcare and life insurance benefits to more than 400,000 retirees and their families in the U.S.

Furthermore, GM sales are hampered by the poor resale value of its vehicles. GM cars on average fetch $3000 less per vehicle than their counterparts. High raw material costs are also a serious problem facing automakers. The prices of commodities have risen dramatically in the past few months, and GM is finding it difficult to pass this on to its customers.

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