NEW YORK (TheStreet) -- I feel for General Motors (GM) in this recall mess. Thanks to an overzealous legal system, in which the tiniest mistake gets punished by draconian lawsuits, GM is now recalling almost every single car ever made, in many cases for the flimsiest of reasons.
In the spirit of providing some cheer for the GM's beleaguered management team, I have a proposal for how GM could spin out one of its factories for a market cap of $400 billion, basically almost eight times its current $50-something billion market cap. Follow me on this one!
I got the idea from an article over the weekend, published in Dallas Morning News, which had a report from GM's large SUV factory. It's about the factory that produces GM's large SUVs with nameplates such as Tahoe, Suburban, Yukon and Escalade. A new model series just went into production in early 2014.Here are the characteristics of this GM business unit, located in Texas: -- 1,200 vehicles are produced per day, six days a week, sometimes seven days a week. -- The factory is running at least 24x6 for 144 hours per week. -- That's basically approaching 400,000 vehicles per year. -- Yukon model sales growth was 136% in April and 42% in May. -- Days on dealer lots are among the shortest of any car in the market today -- 10 days for Suburban and 17 days for Tahoe. -- Most popular model starts at $63,000. A typical transaction price could be over $70,000. Think about these numbers for a moment. A factory producing cars at essentially 100% capacity, sales growing deep into the double digit percentages, near-zero inventories. Sounds like Tesla (TSLA), doesn't it?
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV