GM surfs on wave of ‘truck’ sales to save Q3 results
The American car manufacturer GM has saved its third-quarter results because of the high demand for big SUVs and pickup trucks. Nevertheless, many uncertainties remain because of the pandemic and the lack of an economy-supporting program.
In Q3, the net benefit jumped +72% to $4 billion, making the stock value climb by 4,2%. During Q3, while sales were still down 10%, the largest part of these sales concerned SUVs, pickups, and crossovers. All of these are vehicles that can be sold at higher prices (and benefit margins).
Meanwhile, GM has also upped its sales by 12% in China for the same period, and its financing arm has done very well, too, lately. It all resulted in a turnover of $35,48 billion. At the same time, $200 million of savings have been made in the same period.
The waiting for a new president to be finally appointed weighs on the economy, underlines GM CEO, Mary Barra. “I don’t know if we will have to wait another 36 days, like in 2000 (battle Bush-Gore over ballots in Florida), but it had a bad influence on sales,” she states.
Another problem is that the pandemic is far from gone in the US, where the third wave of Covid-19 is starting to spread around. “There are many things uncertain and moving at the time,” worries Barra.
Reinvesting in Canada
Illustrating the relentless demand for SUVs and pickups in North-America is GM’s decision to reinvest in its Oshawa factory (east of Toronto, Canada). It had planned to close entirely a year ago. At the moment, there were still 2 500 employees (compared to the 23 000 that worked on-site in the eighties).
Now GM is thinking of re-employing 1 700 of its workers to build “the new family of pickups” over there. To do so, GM will reinvest $1,3 billion in the Canadian factory. By doing so, it avoids a union strike by Unifor. This union, representing some 1 700 workers of GM, has recommended that its members approve the new principles agreement.
GM is the last of the ‘big three’ to have an agreement with Unifor. Its two rivals, Ford and FCA, have already reached an agreement and have also decided to reinvest in Canada and hire thousands of people again. All three want to produce mainly electric vehicles or plug-in hybrids in their respective plants.
Together with the Japanese manufacturers, the three American companies will now give work to 44 000 Canadians again in their plants. Canada exported last year for €52 billion of automotive (vehicles and parts). Almost everything was exported to the US. This represented 13% of the total export of the country.
Electric and autonomous
On Monday, GM also announced that it will hire 3 000 additional engineers, computer scientists, and designers. They will be asked to develop the electric and autonomous cars of the future. GM President Mark Reuss thinks it’s important that GM “recruits and adds varied talents to its human portfolio”.
In a press release, Reuss said that “this will show that we are determined to develop the tools we need to dominate the market for electric vehicles and at the same time improve customer experience and our digital expertise.”
At the moment, GM is already selling electric cars, like the Volt and the Bolt, but now it wants to really accelerate electric development. It’s working on a whole new electric platform (Ultium) and the two first products to be based on it will be an electric Hummer, and a new electric Cadillac SUV called Lyriq. Many others (including the pick-ups destined to be built in Canada) will follow.