General Motors Co. today provided investors with an update on its strategic plan as it continues to build the foundation for the company’s long-term success. GM also said it expects earnings growth in 2019, compared to projected 2018 full-year results.
For 2019, GM expects earnings per share (EPS) diluted-adjusted of between $6.50 and $7.00, and adjusted auto free cash flow of between $4.5 billion and $6 billion. The company says its outlook will benefit from a strong product lineup, growth of adjacent businesses, and business transformation initiatives.
The company will also continue focusing on efficiently deploying capital to higher-return products and segments, creating an efficient cost structure and improving cash flow.
Adding to GM’s product momentum in 2019 will be the ongoing launches of the Cadillac XT4 and Chevrolet Blazer SUV, and the introduction of the all-new Cadillac XT6 luxury SUV.
Cadillac will be GM’s lead electric vehicle brand and will introduce the first model from the company’s all-new battery electric vehicle architecture, GM’s foundation for an advanced family of profitable EVs. The flexible platform will provide a broad array of body styles and will be offered in front-wheel, rear-wheel and all-wheel configurations.
Its most critical components — including the battery cells — are being designed for maximum usability across all programs. The battery system will also be adjustable, based on vehicle and customer requirements.
“We will continue to strengthen our core business and invest in the technologies that will transform the future of mobility,” says Mary Barra, chairman and CEO of General Motors. “Managing both well is critical to position General Motors for success for generations to come.”
GM expects to start launching its all-new global family of vehicles in 2019 in China, followed by South America and Mexico. The first crossover model will be the Chevrolet Tracker. The vehicles are expected to capture growth in key global markets and represent one-in-10 GM vehicles sold globally by 2020.
In South America, GM has lowered its breakeven point by 40 percent, but is continuing to look for ways to improve business performance. With Chevrolet as the market leader, the company says it is well positioned to leverage improvement in the macro environment. Restructuring actions have placed GM Korea on a path to enterprise-level profitability.
GM views the China market constructively and is well positioned for long-term growth, even with recent challenges faced by the industry and economy. The company expects 2019 China industry retail sales to be in line with 2018 levels of nearly 27 million.
GM China will remain agile in responding to shifting market dynamics, as it launches more than 20 all-new or refreshed vehicles in 2019. Those new products include compact cars and crossovers from GM’s new global vehicle family, and new-energy vehicles.
Based on the current rate of iteration and gated by safety, Cruise is progressing toward commercializing self-driving vehicles in a dense urban environment this year.
The company has more than 1,100 employees, a new office in Seattle, and $5 billion in external capital raised since May 2018. Cruise also continues to focus on the entirety of the autonomous vehicle ecosystem, recently signing a partnership with DoorDash for food delivery.
In 2019, despite a declining car market, GM expects the overall U.S. market to remain strong, projecting total industry sales in the low 17-million range. The company says it will benefit from a full year of volume from GM’s all-new Chevrolet Silverado and GMC Sierra light-duty full-size pickups. The trucks havecontributed to retail market share growth in the light-duty pickup segment every month since August, with average transaction prices that have surpassed thoseof key competitors.
With earning assets in excess of $90 billion, more than 6 million retail customers and industry-leading manufacturer loyalty rates, GM Financial remains well-positioned for continued, profitable growth. The captive finance arm commenced an annual cash dividend to GM in the fourth quarter of 2018.
In November, GM announced steps to position the company for long-term success. As a result, by year-end 2020, GM expects to realize about $6 billion in cash savings. The actions are being taken while the industry and economy remain strong.
“We are focused on strengthening our cash generation and creating efficiencies that will position us to take advantage of opportunities through the cycle,” says Dhivya Suryadevara, CFO of GM.
In the U.S., as a result of continued growth of crossovers and trucks, thecompany will be able to provide approximately 2,700 positions to the 2,800 active hourly workers impacted by the November announcement. Impacted salariedemployees will be provided outplacement services including job search assistance, career counseling, resume writing and interview skills.
In Canada, GM Canada is working with local colleges, universities, dealers, and more than 20 local employers who have expressed interest in hiring GM employees. GM Canada has committed to support retraining for its Oshawa Assembly Plant employees. To fund immediate transformation costs and provideadditional financial flexibility, the company plans to secure a $3-billion revolving credit facility.
GM expects 2018 EPS-diluted-adjusted and adjusted automotive free cash flow to exceed the guidance provided when reporting its third quarter 2018 earnings on Oct. 31, 2018.