Cadillac could be the next Tesla if General Motors markets it right (GM, TSLA)

pulse

January 8, 2018 10:36 PM

General Motors could do much more with its popular brand, Cadillac, with just the right marketing push, a Morgan Stanley analyst notes.

The automotive company is undervalued because investors have not properly gauged the potential of Cadillac.
The luxury vehicle's biggest market is China, representing an upside for General Motors' stock.
You can view GM's stock price

General Motors could market its Cadillac brand as the next sustainable and high-performance electric vehicle just like Tesla.

With aggressive marketing, the automotive company has the "potential for fundamental repositioning of Cadillac as a 'captive Tesla,'"Adam Jonas, an equity analyst at Morgan Stanley, said. The company needs to improve consumer awareness of its brand and technologies, such as a future propulsion system and a subscription-based business model, he added.

Investors have been undervaluing General Motors because Cadillac is larger and more profitable than investors believe. "Discussions with investors suggest a potential "blind spot" on the strategy and valuation of General Motors," Jonas wrote in a note.

Cadillac reported a sales increase of 15.5% year-to-date, as of December 2016. GM does not break down the profit for its specific brands though.Jonas estimates that Cadillac could be worth $13 billion given the increasing sales, which have doubled since 2010.

Cadillac's largest market is China, which accounts for over a half of GM's global sales volume.

General Motor's stock is up 5.93% over this year.

pulse