General Motors suffers Q2 loss as sales plunge

GENERAL Motors posted a $US806 million ($A1.12b) loss last quarter, but given the COVID-19 induced shutdowns and sluggish vehicle sales, the company said the figure was not as bad as expected and is forecasting a profitable second half of the financial year.

The optimistic outlook is based on booming demand for its pick-up trucks in North America where some plants are running three shifts just to keep up. 

Demand for its vehicles has spread to Australia too where concrete evidence of a new wave of Chevrolet vehicles was confirmed with GM filing a trademark application for GMSV (General Motors Specialty Vehicles) with the Department of Industry, Innovation and Science. 

The department’s IP Australia office administers intellectual property rights and legislation relating to patents and trademarks. 

GMSV is charged with establishing a network for sales of Chevrolet vehicles in Australia, including the Corvette and Silverado.

The second quarter sits in stark contrast compared to its $US2.42 billion ($A3.37b) profit made in the same period last year, with CEO and chairperson Mary Barra saying the loss was made during “one of the most challenging” times in the company’s history, but also that it was now poised for a “continued recovery”.

GM remains on track to continue cost cutting, with plans to reduce expenditure by $US6 billion ($A8.36 billion) through the rest of 2020 before investing $US20 billion ($A27.86 billion) in EVs and autonomous vehicles between now and 2025.

On the share market, the Detroit giant’s shares fell US50c (A70c) to $US25.39 ($A35.37), where analysts had expected falls of about $US1.80 ($A2.50). It is now around $US25.90 ($A36.08) a share.

Sales slumped 34.6 per cent in the US in the second quarter, slicing into revenue that plunged 53 per cent to $16.8 billion ($A23.4b) as the pandemic wreaked havoc and burned into $US7.8 billion ($A10.86b) of cash reserves.

GM factories in North America were closed for eight of the 13 weeks of the quarter.

Sales in North America fell from 747,000 units to 492,000 units, and global sales of GM products slid from 1.9 million vehicles to 1.5 million. While the US market was hit the hardest, Chinese sales fell a more modest 5.3 per cent.

GM said its sales in China may have fallen slightly but in the second quarter it turned a $US169 million ($A235.4 million) profit after losing money in the first quarter. It was boosted by Chinese demand for new SUVs and the Cadillac CT4 sedan.

GM’s chief financial officer Dhivya Suryadevara said that if annual US sales continued at a rate of 14 million and production is not disrupted, the company should generate between $US7 billion ($A9.75b) and $US9 billion ($A12.54b) in revenue during the second half of the year.

While the company burned $US7.8 billion ($A10.86b) in cash over the past three months, it still has cash-at-hand of $US30.6 billion ($A42.62 billion).

The brand still owes the $US16 billion ($A22.3b) it borrowed from a revolving credit line in March to cope with the effects of the pandemic, a sum it says it is comfortable repaying by the end of year deadline.