GM reports better than expected quarterly profit
General Motors Co reported a better-than-expected quarterly profit despite a drop in production of high-margin pickup trucks, as it gears up for new models that are expected to boost profits later this year.
Like rivals Ford Motor Co and Fiat Chrysler Automobiles, GM is banking on highly profitable pickup trucks to boost margins, as US consumers shift away from traditional passenger cars in favour of larger, more comfortable trucks, SUVs and crossovers.
Executives said GM will reduce spending on traditional sedans in North America, while introducing new low-cost passenger cars next year in China and South America.
During the first quarter, the process of retooling assembly plants to make GM's new pickup trucks resulted in a drop in production of 47,000 units. GM Chief Financial Officer Chuck Stevens said the production drop had reduced pre-tax profit by up to USD 800 million.
Earlier this year, GM said its 2018 profits would be flat compared with 2017, but expected its all-new pickup trucks would boost margins later this year and in 2019. On 26 April, GM reiterated its full-year 2018 forecast for adjusted earnings in a range from USD 6.30 to USD 6.60 per share.
The new GEM vehicles, which include sedans and crossovers, will launch in the second half of 2019 in China and South America, with annual production ramping up to 2 million by late 2021, Stevens said.
GM Chief Executive Ms Mary Barra said the automaker has "a strong franchise" in South America, with the new GEM vehicles contributing to the bottom line.
Source : Economic Times