GM Projects Strong Earnings, Improved Cash Flow in 2019

AutoInformed on GM Kisses Trump's ButtGeneral Motors Co. (NYSE: GM told investors that it expects earnings growth in 2019, compared to projected 2018 full-year results. Earnings per share diluted-adjusted of between $6.50 and $7.00 were predicted, along with adjusted automotive free cash flow of between $4.5 billion and $6 billion. GM expects 2018 EPS-diluted-adjusted and adjusted automotive free cash flow to exceed the guidance of adjusted earnings of between $5.80 and $6.20 per share provided when reporting its third quarter 2018 earnings on 31 October 2018. (GM Q3 Profits Ambush Analysts – Income $2.5 Billion EBIT)

In 2019, despite a diminishing vehicle market, GM expects the overall U.S. volume to remain strong, projecting total industry sales in the low 17-million range. The company will benefit from a full year of production from GM’s all-new Chevrolet Silverado and GMC Sierra light-duty full-size pickups. The trucks have contributed to retail market share growth in the light- duty pickup segment every month since August, with average transaction prices that have surpassed those of key competitors.

GM said another plus in 2019 will be the ongoing launches of the Cadillac XT4 and Chevrolet Blazer SUV, and the introduction of the all- new Cadillac XT6 luxury SUV. Cadillac will be GM’s lead electric vehicle brand and will introduce the first model from the company’s all- new battery electric vehicle architecture, GM’s foundation for an advanced family of profitable EVs.

The flexible “BEV 3platform will provide an assortment of body styles and will be offered in electric front-wheel, rear- wheel and all-wheel drive configurations. In what could be either a decisive advantage or crushing capital investment in pursuit of a market that never emerges, BEV 3’s critical components – including the battery cells – are being designed for usability across all programs. The battery system will also be adjustable, based on vehicle price positioning and customer requirements. Meanwhile the launches of an all-new truck portfolio in the U.S. and crossovers globally will continue.

International Markets

Of note in the high risk, high reward segments, GM expects to start launching its all-new global family of vehicles in 2019 in China, followed by South America and Mexico. The first crossover model will be the Chevrolet Tracker. These vehicles are expected to capture growth in key global markets and represent one-in-ten GM vehicles sold globally by 2020.

In South America, GM claims it has lowered its breakeven point by 40% but is continuing to look for ways to improve business performance. With Chevrolet as the market leader, the company can leverage improvement in the macro environment that it has no control over.

Restructuring actions have placed GM Korea “on a path to enterprise-level profitability.”

GM China

GM views the tariff and trade-war troubled Chinese market – the world’s largest – as well- positioned for long-term growth, even with recent trials faced by the industry and economy. The company expects 2019 China industry retail sales to be in line with 2018 levels of nearly 27 million.

GM China will launch  more than 20 all-new or refreshed vehicles in 2019. Those new products include compact cars and crossovers from GM’s new global vehicle family, and “new-energy” vehicles.

Commercializing Autonomous Vehicles

Cruise is “progressing toward commercializing self-driving vehicles in a dense urban environment this year.” GM notes that Cruise, which could be an easy spin-off, is deeply resourced (it’s worth ~$15 billion) to succeed, with more than 1,100 employees, a new office in Seattle, and $5 billion in external capital raised since May 2018.

Last October, GM announced that Honda will join Cruise to build a new autonomous vehicle. The purpose-built AV will serve a wide variety of uses and be manufactured at high volume for global deployment. In addition to its $750 million equity investment in Cruise, Honda committed another $2 billion to Cruise, including development costs for the purpose-built AV.

“Cruise continues to focus on the entirety of the autonomous vehicle ecosystem, signing a partnership with DoorDash for food delivery this past week,” GM said.

About Ken Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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