Why Shares in General Motors Crashed Today
Shares in General Motors (NYSE: GM) were down by more than 5% by midday. The moves coincide with a broad-based sell-off in the automaker sector, driven by a disappointing earnings report from used-car dealer CarMax.
CarMax's comparable used-unit sales were down a whopping 22.4% in its third quarter, compared to the same period a year ago. In response to the weakening market conditions, CarMax only bought 238,000 vehicles from consumers and dealers -- a figure almost 40% below that in last year's third quarter.
The news from CarMax, hot on the heels of disappointing earnings and news flow from Carvana, suggests trouble ahead for the auto industry. So naturally, a weakening used auto market is not good news for General Motors, as it pressures new-car sales and prices. Similarly, the reasons for the weakness -- rising interest rates and a slowing economy -- also pertain to the automaker.
Source Fool.com
