General Motors booked a solid 1.6% rise in second quarter 2019 operating income to US$2.4bn as redesigned light duty pickup trucks found success in North America.
The new trucks, crossovers and restructuring cost savings drove a strong 10.7% EBIT-adjusted margin in North America.
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International operations broke even ($0.1bn profit in Q2 2018) due to a $400m decline in China income from a record Q2 2018, partially offset by better performance outside of China.
GM Cruise – the mobility unit run by Dan Ammann – booked a $0.3bn loss ($0.2bn in the red a year ago) after it completed a new funding round and postponed plans to launch in San Francisco. Since 2016, Cruise has increased its staff from 40 to 1,500.
GM Financial’s $0.5bn profit was flat – revenue of $3.6bn in the second quarter was a record. Continued portfolio growth contributed to EBT results.
GM overall booked $36.1bn in revenue, down 1.9%. Adjusted EBIT was $3bn, down 5.6%.
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By GlobalDataThe automaker said sales of the new Chevrolet Silverado and GMC Sierra light-duty crew cabs were up double digits year over year for the second straight quarter and gained nearly 3 percentage points of retail share from Q1 to Q2, and remained the retail market share leader in the segment. Full production of all cab styles – including more affordable regular and double cabs – started in March, helping normalise availability of the entire lineup.
New heavy duty pickups launched in June, with early production focused on HD crew cab models, similar to the light-duty launch sequence. With the previously announced 40,000 unit additional capacity at Flint Assembly, the company is poised for significant growth in this profitable segment, it said.
GM delivered 747,000 vehicles in the US, led by crossover sales which set a Q2 record with a 17% increase year over year. The Chevrolet Equinox and Traverse set Q2 records; every Buick crossover was up; the GMC Acadia posted its best first half ever; and the new Cadillac XT4 continued to lead its segment. US retail market share was estimated to be “fat” compared to a year ago, with trucks and crossovers offsetting lower passenger car sales.
GM China sold 754,000 vehicles in the second quarter, about 100,000 fewer than the previous year’s quarter, due to an overall market decline, segment shifts and lower demand for outgoing models.
Due to China’s economic slowdown, China industry unit sales are expected to remain weak through the second half of the year, with industry deliveries projected to be down for the full year. GM China expects to benefit from about 20 new vehicle launches, the majority of which will go on sale later in the year. Nearly two thirds of the launches in the second half are SUVs. However, GM expects equity income in the second half of the year to be generally in line with the first half, due to ongoing headwinds.
“Our results demonstrate the earnings power of our full-size truck franchise, with more upside to come,” said chairman and CEO Mary Barra.
“We had a solid second quarter, and expect the second half of the year to be stronger than the first half. Our confidence in our full-year outlook is based on our strong full-size truck rollout, other key launches and ongoing cost savings,” added CFO Dhivya Suryadevara.
