General Motors Announcement Sends American Axle Stock 13% Lower

Shares of American Axle & Manufacturing Holdings (NYSE: AXL), a Detroit-based global tier 1 automotive supplier of driveline and metal forming solutions, are down over 13% after an announcement from General Motors (NYSE: GM) that could signal trouble for AAM.

AAM investors likely already know how important a customer General Motors is to the supplier. In fact, AAM sales to GM were roughly 37% of the supplier's consolidated net sales in 2019, 41% in 2018 and 47% in 2017. That decline isn't all a bad thing, considering AAM would prefer to have a wide range of large customers and for the supplier to be less dependent on GM for financial success. But GM's announcement that it plans to develop and produce a family of electric vehicle drive systems and motors could signal that the largest Detroit automaker will be making more of its drive systems in-house, rather than using suppliers such as AAM. In fact, the following quote from GM should have AAM investors feeling a little anxious about future business between the two.

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Source Fool.com