General Motors is busy phoning friends and posting on its Facebook wall after it made record net revenue in the second quarter of 2016 and boosted its net profit by 157 percent.
A net revenue of $42.4 billion is a high point for the company, even though the automaker’s global sales were flat compared to this time last year, with 2.4 million vehicles sold. Is it any wonder GM isn’t concerned about its falling market share?
It’s a great time to be a GM shareholder — thanks to a net income of $2.9 billion, adjusted earnings per share were up 44 percent over the second quarter of 2015. Too bad governments north and south of the border already sold off their remaining shares in the bailed-out automaker — that could have potentially delayed some new taxes.
In a release, GM Chairman and CEO Mary Barra said the results “were generated by strong retail sales in the U.S., record sales in China and a continued emphasis on improving the performance of our operations worldwide.”
Lately, the automaker focus has been on profitability, with fewer fleet sales and less incentivising. If it means fewer sales numbers, so be it. Passenger cars are struggling, but GM is well positioned to boost profits in the growing truck and SUV market.
Record operating margins were also recorded in the second quarter, rising to 9.3 percent globally and 12.1 percent in North America. GM said it expects to see higher volume from new or refreshed vehicles in the near future than in recent years. The automaker is hoping for 40 percent of sales to come from new product by 2020, up from 26 percent in 2015.
The truck is strong with this one…
Seriously…imagine if they had Hellcats?!?! Fuhgeddaboudit!!!!
They could have hellcats, Wranglers, minivans, and increase market share to former levels of glory. Have somebody call Sergio for a little negotiation! Just not Mary – Sergio’s a bit of a lech.
I’m happy to see GM thriving despite my dire predictions back in the Bailout Days.
GM failed because of the concept of “we’ll make it up in volume.”
If it costs $15K to build the Cavalier and you make $13K on each one sold after the incentives on the hood, you’re boned.
I had said almost a decade ago I don’t care if GM has 10% NA market share, just be profitable.
Record profits and net earnings means more money for R&D.
More money for R&D means better products.
Better products means more profits and eventually more market share.
It isn’t rocket science.
Cadillac is a hot steaming mess, I know someone will jump on this post and reply with that – no denying that.
Silverado redesign, which TTAC predicted would be a total failure, wasn’t.
GM sales of Colorado/Canyon are restricted by production, not customer interest – and good luck finding base model $25K versions on dealer lots.
The Impala is probably the best non-luxury fullsizer you can buy today.
The new Cruze is getting rave reviews.
There is a lot more right at GM then wrong – and they are going in the correct direction.
Contrast that to the state of the other bailout benefactor, FCA. If FCA didn’t have Jeep they would be circling the drain and unlike GM which as the Volt, Bolt, Cruze, Sonic, Spark, Trax, hybrid Malibu, and Encore – never mind the 1.4 turbo, the 1.6 turbo, the 2.0 turbo, and the 2.5 NA – if gas went to $5 a gallon, FCA is completely screwed.
APaGttH – It is good to see GM focus on profits and not the #1 sales title. That killed them once and is in the process of killing VW.
The Silverado/Sierra siblings slipped in sales shortly after release. New pickup models tend to see an upswing once released, they didn’t. It took a year or two to gain market share with big incentives offered right off the bat. Again, that tends to be unusual in the pickup world.
The Silverado redesign did not appeal to me initially. In some respects I liked the Sierra better. The current evolution of the Silverado is decent but I don’t like the Sierra’s facelift.
The next generation GM 1/2 tons really need to be a step-up from the current trucks to stay competitive IMHO. I’m surprised they are selling as well as they are. RAM is doing better than ever. Ford’s F150 w/aluminum bodies, TT gas engines, and now a diesel in the works, is really starting to leave GM’s Silverado/Sierra in the dust. Hopefully they realize this and aren’t 1/2 a$$ing the next gen. Ford also finally updated the long in the tooth HD line. Even with that relic they still owned that market so I suspect with the new truck they’ll be even more dominant.
Got my first seat-time in a rental RAM 1500 with the Pentastar. As far as driving dynamics are concerned, it had me seriously thinking about biting the bullet and going bigger when my Tacoma lease expires. Power was excellent, the thing was quiet as a bank vault and the ride quality was a real surprise.
What I didn’t like was that with only 18K miles, the interior was showing wear that I thought premature. Also, the rotary transmission knob seemed a bit too much like (and too close to) the fan knob, which I found a bit distressing.
Now I really want to drive a new F-150 with the 2.7.
This is, perhaps, the toughest market segment of them all.
“Silverado redesign, which TTAC predicted would be a total failure, wasn’t.”
And that was dumb. I don’t remember if it was Bertel or Derek at the helm at that point, but it was as dumb as other places predicting doom and gloom for the new F150. Bertel also had those ridiculous “channel stuffing” articles about GM flooding dealers with GMT900s before the changeover. It turned out that they did a better job at giving dealers inventory of the old truck than Ford did in 2014/2015.
GM, prior to the bailout, was hopelessly hooped. Quite often due to labour contracts(and other contractual obligations) it was a smaller loss to keep the factory churning out money losing Cavaliers etc rather than idle. At least that was apparent conclusion from their words and actions.
For a number of years the profits from GMAC help divert attention from the mess in their core business. Management just never aggressively tried to adapt and readjust their operations. I often wondered if they did make all the right moves in the 2000’s would it have made a difference to their fate. I believe not, the massive benefits the bailout and reorganization provided would not have been available without a crisis like 2008.
It was an attractive short back in 2006/7. They seem to be a much improved organization but man, it is hard to go long and buy their stock as skepticism lingers due to their history of burning investors
Not surprised at all as I have been saying all along that GM was focusing on profits (cutting back on rental fleet and incentives) and not market-share, despite the repeated ramblings of certain naysayers here.
But things would be even better for GM if their crossover lineups weren’t so old and Cadillac actually had a full crossover lineup (which won’t happen until 2020 or so).
On the passenger car front – it’s a mixed bag for GM, but pretty much every automaker has issues these days with that market.
But the Malibu is up nearly 25% YTD (and that’s without its full lineup of power-trains) and the Impala is pretty much even for the year despite a pull-back in sales to rental fleet (the Impala has also become a hit in Korea).
The Cruze is down big (32%), but that’s largely due to the transition to the new model (adding a hatch version should also help as Americans have become more accepting of hatches).
For Buick, the Verano is slated to disappear, but with a new (and larger) Regal and LaCrosse on the way, sales of those models should reverse the downward trend.
But that’s not where the market is going and the margins on passenger cars these days are pretty slim – once GM updates the Equinox, Enclave, Traverse, etc. – GM’s profit margin will only increase.
A company can not just keep reducing market share in the long run in search of higher profits. If this were true, GM should scuttle Buick, GMC and Cadillac and stick with just Chevrolet. They can make all the Buicks and Cadillacs they want in China, just don’t bring them here.
I just hope that GM remembers its benefactors and keeps investing in domestically produced and sourced vehicle lines.
If the Envision trend continues, word will get out, and customers will abandon GM in droves, trucks included.