General Motors Co. in Detroit today provided new details on the upcoming GMC Hummer EV, while it reported net revenue of $16.8 billion for the second quarter, a loss of $800 million compared to the second quarter of 2019.
The automaker says the Q2 results demonstrate the resilience of the business as it continues to work through the COVID-19 pandemic.
Its auto operating cash flow was $8 billion, and its diluted earnings per share was $0.56. The company ended the second quarter with $30.6 billion in automotive liquidity.
Product development work on GM’s electric and autonomous vehicle portfolios continued to progress. Production timing remains on track for the Cadillac LYRIQ, which will be revealed on Aug. 6, and the Cruise Origin and the GMC Hummer EV will be revealed in the fourth quarter, all powered by the Ultium battery system.
In a video released today by GM, which starred basketball star LeBron James, a silhouette of both a pickup (dubbed “The World’s First Supertruck”) and an SUV version could be seen. Production will start at the Detroit-Hamtramck Assembly Plant in fall 2021. The video can be seen here.
“We have a track record of making swift and strategic decisions to ensure our long-term success for the benefit of all our stakeholders,” says Mary Barra, chairman and CEO. “We will continue to drive the necessary change throughout the company to enable growth as we prepare to deliver a world with zero crashes, zero emissions, and zero congestion.”
Chevrolet Silverado and GMC Sierra sales were strong, leading to year-over-year U.S. market share growth, despite tight inventory. The demand translated to stronger average transaction pricing and lower incentives, with full-size pickup ATPs increasing $1,526 versus the first quarter, according to J.D. Power.
Launch plans for GM’s full-size SUVs also remained on track, with the first customers taking deliveries in June.
Total income and earnings before interest and tax-adjusted reflect the COVID-19 pandemic impact. There was a 62 percent drop in GM North America wholesales, a $200 million decline in GM International earnings before interest and tax-adjusted, and lower GM Financial earnings before taxes, partially offset by cost actions compared to last year.
GM North America results neared breakeven. Performance in China improved from the first quarter, with growing sales and equity income of $200 million in the second quarter.
“Clearly, the second quarter was a challenge, but we achieved near breakeven EBIT-adj. in North America, despite losing eight of 13 weeks of production,” says Dhivya Suryadevara, CFO. “These results illustrate the resiliency and earnings power of the business as we make the critical investments necessary for our future.”
The company says it has taken actions over the past several years that have positioned the company for a downturn. GM implemented zero-based budgeting during the quarter and reduced its ongoing costs through measures including reductions in advertising and other discretionary spending, compensation deferments, and certain employee furloughs. The measures are expected to normalize as production and demand stabilize, with some of the measures remaining permanent.
Progress on GM’s cost savings initiatives continued, with $3.8 billion achieved since 2018. The company expects to achieve its target of $4 billion-$4.5 billion, with another $200 million in the second quarter.
Second-quarter adjusted auto free cash flow was $9 billion, down $11.6 billion year-over-year. The difference was largely due to the financial impact of the pandemic and managed working capital unwind, partially offset by lower capital expenditures. The quarter benefitted from a $500 million dividend from GM’s China operations and a $400 million dividend from GM Financial. Total automotive liquidity at the end of the quarter was at $30.6 billion.
The company continued to invest in product programs and launches including its electric vehicle programs, autonomous vehicle technology, full-size trucks, and crossover programs.
U.S. sales declined about 34 percent year-over-year. Results were impacted by reduced demand and tight dealer inventories caused by the production shutdown. Overall sales showed signs of recovery, especially retail sales, which improved from April’s 35-percent decline to May and June, when year-over-year declines were around 20 percent.
The all-new Chevrolet Trailblazer and Buick Encore GX have gained retail market share every month since launch and combined have captured more than 10 percent of the small SUV segment, according to J.D. Power.
Working to increase U.S. dealer stocks, the company has restarted all U.S. full-size pickup trucks and full-size SUV plants to three shifts, and nearly all other plants are operating at pre-pandemic shift levels. Through July 25, landed U.S. dealer stock has grown by 9 percent, and total vehicles in-transit was up 6 percent since June.
The Fort Wayne Assembly plant will be increasing regular production of light-duty full-size pickups by about 1,000 units per month beginning Sept. 1.
During the quarter, Ultium Cells LLC, GM’s joint venture with LG Chem for cell manufacturing, started construction. Site construction for the future manufacturing facility in Lordstown, Ohio began in April, foundation work started July 1, and crews began erecting building steel today.
In China, Buick expanded its electric vehicle portfolio and launched the VELITE 7 and VELITE 6 PHEV on July 24. The VELITE 7 is Buick’s first electric SUV, offering up to 500 kilometers of range, and its electric propulsion system is powered by a new modular high-performance lithium-ion battery that has higher energy density through improved cell chemistry and an optimized design. The new launches compliment Buick’s VELITE 6 and VELITE 6 Plus electric vehicles.