General Motors Q2 earnings: Despite a major electric vehicle recall, GM’s second-quarter net income rose 52% to $2.54 billion.
The automaker’s relentless sales, pricing, and cost-cutting drove the impressive earnings. Without a strike, General Motors will raise its full-year financial guidance.
In the last quarter, customer payments rose $1,600 per vehicle, raising the average U.S. sale price to $52,000, according to Chief Financial Officer Paul Jacobson. General Motors’ U.S. vehicle sales rose 19%, especially in its most profitable segment. Discounts and inventory were stable.
Consistent pricing and incentives met consumer demand. General Motors maintained pricing in a volatile market.
After a strong second quarter and optimistic outlook, GM raised its full-year guidance again. From $8.4 billion to $9.9 billion, the automaker expects net income of $9.3 billion to $10.7 billion.
Cost savings of $1 billion on top of the $2 billion expected for the year improved the financial outlook. These savings came from marketing, administrative, and vehicle manufacturing efficiencies and 5,000 salaried employee buyouts.
General Motors took a $792 million one-time charge to cover more of the $1.9 billion Chevrolet Bolt recall cost. Battery manufacturing defects caused this recall.
Despite this extraordinary charge, General Motors reported earnings of $1.91 per share, beating Wall Street’s $1.87 estimate. Revenue of $44.75 billion exceeded analysts’ $42.13 billion estimate.
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GM reached its first-half goal of 50,000 North American electric vehicles. Scaling up battery cell and vehicle assembly, the company plans to produce 100,000 EVs in the second half of 2023.
GM will build only electric passenger vehicles by 2035. By 2025, the company wants 30 global EV models.
General Motors lowered its capital spending forecast for this year to $11 billion to $12 billion from $11 billion to $13 billion due to strong financial results.
Negotiations with U.S. and Canadian autoworkers could be contentious. GM, Stellantis, and Ford’s mid-September contracts expire, and United Auto Workers President Shawn Fain expects significant gains in this year’s contract talks. He also noted that strike preparations may be needed to meet workers’ demands for cost-of-living and general pay raises, wage parity for all employees, pension restoration, and other important issues. General Motors may negotiate cautiously to reduce costs.
