Pricey truck sales boost GM earnings despite lower volumes
New York (AFP)
Strong demand for pricey, high-end trucks in North America boosted General Motors' earnings, offsetting lower car sales, especially in China, the company announced Thursday.
The biggest US carmaker reported slightly higher second-quarter profits, and highlighted the launch of upgraded pickup truck models aimed at the American market, where the economy is strong and demand has held up.
The result was a record average transaction price of $37,126 in North America in the quarter, boosting operating income in the region even as the number of vehicles sold in the quarter fell there and in other markets.
"We're really starting to see the earnings potential of the truck enterprise," said GM Chief Financial Officer Dhivya Suryadevara.
Net income rose to $2.4 billion, up 1.2 percent from the year-ago period.
But revenues fell 1.9 percent to $36.1 billion, as global vehicle sales dropped 6.1 percent, a decline of more than 125,000 cars.
In North America, GM vehicle sales fell 4.0 percent, clipped in part by lower inventories of some trucks as the company rolls out the updated models.
Suryadevara described the launches as "cadenced," aimed first at the light-duty pickup market where vehicles endowed with state-of-the-art connectivity and other features command prices of $45,000 and higher. GM's market share in this segment rose during the quarter.
The carmaker plans to unveil heavier pickup truck models through the rest of 2019 and into 2020.
Suryadevara shrugged off analyst concerns that truck launches by Fiat Chrysler and other automakers will dent these profits, pointing to the strong US economy and the age of the fleet being replaced.
"We think the fundamentals remain strong, especially in the truck market," Suryadevara told reporters on a conference call.
The company suffered a 12.2 percent drop in vehicle sales in China, where demand was dampened by the slowing economy. GM, which had previously projected flat auto sales this year in China, now projects a decline.
Suryadevara said the company reduced vehicle inventory by about 10 percent in China and took other measures to reduce costs.
The company plans a series of vehicle launches in China in the second half of the year that should sell well, but said macro conditions remained challenging.
GM confirmed its full-year profit forecast following the results, which topped expectations.
The automaker's share price rose 1.7 percent to $41.03 in early trading.
© 2019 AFP