You could forgive Mary Barra if she were to wag a finger and mutter “I told you so” in the general direction of people scrutinizing the automotive sector.
Five months ago, on the heels of the United Auto Workers’ strike ending, the General Motors Corp. chair and CEO said the company is “much further along than the market is giving us credit for” when it comes to balancing the need to invest in electric vehicles while meeting buyers’ continued demand for internal-combustion products.
On April 23—after reporting strong first-quarter results and a better outlook for the rest of 2024—Barra told analysts that her team is “making extremely good progress across the board.”
“We’ve got momentum. And believe me, we have a very aligned team across GM that is going to seize all these opportunities,” Barra said on a conference call. “From last year to now, much better, much more positive.”
The conversation around GM’s performance is no longer about how much the new UAW contract will add to each vehicle’s production costs. A broader efficiency plan remains on track to deliver $2 billion in cost savings by year’s end and capital spending is settling into a range after several years of big investments.
And the slowdown of the growth rate of EV sales is far less of a worry: Barra and CFO Paul Jacobson on April 23 reiterated their expectation that GM’s EV business will begin to turn a variable profit this year. On top of that, the company’s portfolio of pickup trucks and SUVs is gaining share in the market, with higher-end models lifting margins.
Prices of the company’s vehicles held up better than expected early this year thanks to continued demand, and that trend hasn’t changed so far in April. GM’s worldwide total vehicle sales in the first quarter were about 1.35 million, a slight drop from a year earlier, but ticked up to 709,000 in North America.
“The commercial environment continues to be resilient. This is a very common theme that we’ve had now for more than a year worth of quarters,” Jacobson said on the call. “There’s a lot of […] downward bias but we’re continuing to manage commercially month to month and producing in line with demand. […] It’s been very favorable for us on both pricing and margins.”
Also driving GM’s numbers and optimism for what’s ahead: The cost of making EVs and their batteries is coming down as GM scales up that part of its business. Barra and Jacobson said they are sticking to their 2024 EV sales goals of 200,000 to 300,000 units—up from about 76,000 last year—as they prepare to roll out a handful of new models later this year.
On the back of those trends, GM rang up a first-quarter net profit of nearly $3 billion on sales of $43 billion. Those numbers were up 24% and 8%, respectively, from early 2023, and were helped by those better-than-expected pricing trends—they slipped less than the 2%-2.5% range Barra and Jacobson are assuming for 2024—as well as lower materials costs.
The results were enough to give GM’s leaders confidence to raise their full-year expectations for net income (by $300 million) and adjusted cash flow from automotive operations (by $500 million).
Shares of GM (Ticker: GM) rose more than 5% to about $45.50 after the earnings report and commentary. They have now climbed more than 50% over the past six months, a move that has pushed the company’s market capitalization above $52 billion.
