In the first quarter of 2023, General Motors (GM) witnessed a substantial 25% increase in net income, despite a slight decline in overall U.S. vehicle sales. This impressive financial performance was primarily attributed to the robust sales of pickup trucks and other high-profit vehicles.
GM’s average sales price per vehicle remained relatively stable at just under $50,000, indicating that the company has not experienced the same level of price erosion observed by other automakers. The strong demand for pickup trucks played a pivotal role in driving GM’s financial success during this period.
When compared to analysts’ estimates, GM’s financial performance exceeded expectations. The company reported earnings per share of $2.62, surpassing the Wall Street estimate of $2.13, as per FactSet. This positive financial outcome prompted GM to slightly adjust its full-year net income guidance upwards, now ranging between $10.1 billion and $11.5 billion, an increase from the previous range of $9.8 billion to $11.2 billion. The company also raised its adjusted 2024 earnings per share guidance to $9 to $10, up from the previous estimate of $8.50 to $9.50.
Chief Financial Officer Paul Jacobson attributed the slight dip in prices to an increase in sales of lower-cost vehicles, such as the Chevrolet Trax small SUV, which starts at $21,495 including shipping. Despite this, he emphasized the overall strength of the portfolio, highlighting a 3% growth in pickup truck sales in the U.S. for the quarter.
GM maintains its assumption that prices will decline by 2% to 2.5% over the entire year, although such a decline has not yet materialized. The company witnessed a surge in retail sales of electric vehicles during the quarter, and it is actively increasing its production of its own batteries. GM is optimistic about achieving a mid single-digit profit margin on electric vehicles in the upcoming year.
During the quarter, GM generated $3.84 billion in pre-tax earnings in North America, while incurring a $10 million pre-tax loss in its international operations, including a $106 million loss in China. The company’s Cruise autonomous vehicle unit faced challenges, resulting in a $519 million pre-tax loss. Cruise is currently focused on recovering from a serious crash and allegations of a cover-up in California. CEO Mary Barra stated that Cruise, which had suspended testing and robotaxi rides following the loss of its California license, has resumed testing in Phoenix to update mapping and gather road information.
