GM has taken a lot of flak over the past several months once the announcement of the closure of five different plants was going to take place.
In the wake of that storm, and with the first quarterof sales in the books, GM is showing that the closure of plants and the movement away from sedans is the right choice for the company. There’s no doubt that GM was over capacity with more employees than they needed to build the cars that were being produced, but the financial results show the right decision was made.
Some GM Numbers are on the Decline
When beginning to look at the numbers from GM, you might expect there to be a completely negative result. The shares were down 2.7 percent and earnings were also down seven percent for the first quarter. This was a quarter in which the Ram pickup trucks were able to outsell the GM models. On the global front, GM saw sales drop by nearly 20 percent in China which resulted in a 37 percent decline in the profits from this market. Overall auto sales in China declined 2.8 percent last year and fell again during the first quarter of this year.
Supply and Demand Factors for GM
The plan is for GM to launch 20 new models in China this year, most of them coming in the second half. These new models might spurn a strong surge of sales for the GM brands in the largest automotive market in the world. Right now, the GM team has reported a four-month supply of the Chevrolet Silverado pickup trucks at dealers as of the beginning of April. This is a high level that could cause the company to need to scale back production in the near future.
An Investment that’s Paying Off
GM has invested a large amount of money in the Lyft ride-sharing program for the past few years and at the end of the first quarter, that investment has paid off. The value of the General Motors share of Lyft rose $300 million which increased the value of the shares by 31 cents per share translated to the first-quarter profits. Yes, even in a declining market, the team is able to show a profit, which makes the decisions that have taken place recently, smart one that needed to be made.
Profits Reported for GM
General Motors reported a first-quarter profit of $2.2 billion, which is $1.48 per share. This is an increase of $1.05 billion, or 72 cents per share when compared to the same time last year. This is a positive result and it will make for more future success. They are looking forward to offering us a variety of new electric vehicles including an all-electric pickup truck that will be offered soon. We’ll be glad to see what GM is able to do as the market grows and the changes made give us the future models that we’ll love to drive.
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