General Motors Co. in Detroit and Penske Automotive Group Inc. in Bloomfield Township today each reported first-quarter 2020 financial results that for the first time reflect the impact of the COVID-19 pandemic on their operations.
General Motors reported solid first-quarter earnings with a strong business performance, but the results took a hit as a result of the pandemic.
GM reported first-quarter revenue of $32.7 billion and income of $0.3 billion, and EBIT-adjusted of $1.2 billion, which includes a loss of $1.4 billion due to COVID-19.
North American results in the first quarter were EBIT-adjusted $2.2 billion, up from $1.9 billion in 2019 due to strong sales of light-duty pickups and full-size SUVs.
GM’s International operations lost $0.6 billion in the quarter due to the pandemic. GM Financial posted $0.2 billion EBT adjusted, down from $0.4 billion in 2019. Cruise, GM’s autonomous vehicle unit, lost $0.2 billion, same as in the first quarter of 2019.
GM sales in the U.S. declined about 7 percent, driven by the effects of the pandemic. While sales have been impacted differently across geographies, for many dealers, demand for full-size trucks remained strong. Sales of GM’s full-size pickups rose about 27 percent year over year, with a significant gain in retail market share. They captured 41 percent of combined light- and heavy-duty segments in the first quarter, according to J.D. Power. In China, following the strongest COVID-19 sales impact in February, the industry started to pick up in March, narrowing the monthly sales decline.
“The strength of this company has always been its people, and I’m proud to stand with our best as we confront these challenges together – as one team – while we continue our transformation,” says Mary Barra, chairman and CEO of GM. “We have a track record of making swift, strategic, and tough decisions to ensure our long-term viability and create value for all of our stakeholders.”
Penske Automotive Group Inc., an international transportation services company that operates automotive and commercial truck dealerships in the U.S., Canada, and western Europe, reported revenue of $5 billion compared to $5.6 billion in the same period last year. Income from continuing operations attributable to common shareholders was $51.6 million, or $0.64 per share, compared to $100.1 million, or $1.19 per share in the prior year. Foreign exchange negatively impacted earnings per share by $0.01.
In the U.S., through February, same-store new and used automotive retail unit sales increased 7.5 percent and declined 1.1 percent internationally. In March, the outbreak of COVID-19 began to impact the company in all markets. Many of its U.S. and Germany dealerships were impacted by shelter-in-place orders while operations in Italy, Spain, and the U.K. were closed. As a result, same-store new and used automotive retail unit sales for the month of March declined 40.2 percent.
“In response to the COVID-19 crisis, we implemented a hiring freeze, initiated expense reductions, deferred approximately $150 million in capital expenditures, and furloughed approximately 15,000 employees representing, 57 percent of the worldwide workforce,” says Roger Penske, chairman of Penske Automotive. “In addition, we implemented significant pay cuts including a temporary 100 percent reduction in salary for the CEO and president, a 25 percent reduction in salary for our other executive officers, and the board of directors has waived cash compensation through the end of September.
“We believe the actions taken will help us overcome the challenges of the COVID-19 pandemic and are encouraged by the improving conditions we are starting to see across many of our markets. We will continue to actively monitor the situation and adjust our business model to adapt to the changes presented by COVID-19. I am encouraged by the many positive actions taken by our team to address the changing marketplace.”