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TheStreet Open House

GM Shifts Into High Gear

Stocks in this article: GM VLKAY PEUGY

NEW YORK ( TheStreet) -- Not long ago it was time for me to buy a new car. I test drove Hondas, Acura, Toyotas, Lexus, BMWs and a Buick LaCrosse made by General Motors (GM - Get Report).

Except for the counterintuitive parking brake I really like the feel of the Buick and the solid, smooth ride. It seemed to have the German engineering that one would expect from a BMW or the top-of-the-line Volkswagen (VLKAY) model. (By the way, VW may be the most underpriced auto stock at the moment.)

Since I wrote this article Friday, Dec. 21, the day the world was supposed to end, I can't resist showing you what a colleague sent me. He wrote, "We suppose there's still time for this forecast to pan out, but it seems increasingly unlikely."

Buying a GM product had one disadvantage. Its gasoline mileage wasn't nearly as good as the comparable Volkswagen model that tempts me greatly as a second car. Now that I'm a proud owner of a Buick (it's my second Buick over the past 20 years) I've begun following shares of GM.

Whether there's a so-called "fiscal cliff" fall or a last-minute deal, GM is moving forward with vigor and determination. Friday's Wall Street Journal heralded the company with the headline "GM, Peugeot Widen Alliance."

The companies will accelerate a 10-month project to build a 3-cyclinder gasoline engine which comes on top of a mutual plan to develop three platforms for a series of small and compact models. These cars will be sold under GM's Opel and Vauxhall as well as PSA Peugeot Citroen's (PEUGY) Peugeot and Citroen brands starting in 2016.

The Journal article stated, "The Franco-U.S. alliance, sealed in February when GM bought a 7% interest in Peugeot Citroen, is being watched closely because the two auto makers are struggling to reduce heavy losses in their European operations, which have been battered by slumping auto sales and a price war."

GM's European division is on track to lose somewhere between $1.5 and $18 billion this year, depending on the costs of restructuring. The company's European division lost $747 million in 2011.

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