Key Takeaways From General Motors’ Q3 2017 Earnings

October 25th, 2017 by Trefis Team
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General Motors

General Motors (NYSE:GM)  reported its Q3 2017 earnings on October 24th and the company beat analyst expectations on EPS (earnings per share) recording a diluted adjusted EPS of $1.32 from continuing operations. It reported revenues of $33.6 billion which were in line with analyst expectations. Below is a summary of the company’s Q3 2017 results:

 

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Income for continuing operations in this quarter was impacted by a non-cash charge of $2.3 billion relating to deferred tax assets no longer realizable due to the Opel/Vauxhall sale.  The highlight of this quarter was the strong revenues reported by the GM financial segment. During this quarter, the company achieved more than $5 billion in cost efficiency since 2014 and plans to achieve its ambitious goal of $ 6.5 billion by 2018. These savings would offset the investments in engineering and technology.

Below is a summary of General Motors’ regional performance in Q3 2017.

North America: Wholesale volumes in North America declined by 268,000 units or 26% compared to the same quarter in the previous year. This was due to a planned downtime to match inventory with the demand. The company launched two more crossovers in the U.S. in this quarter, the Buick Enclave and the GMC Terrain. A total of 781,056 vehicles were delivered in the U.S. in this quarter, led by a 25% increase in retail crossover sales.

China: General Motors reported China JV equity income of $0.5 billion in Q3 2017. Deliveries in China were up 12.3% in this quarter compared to the same quarter in the previous year driven primarily by its Baojun and Cadillac brands which registered a 57% and 42% growth respectively. The company introduced five new or refreshed models in China and is likely to launch six more models in the region in Q4 2017.

Going Forward:

  • As General Motors adapts itself to the changing automotive landscape, the company is investing in creating a healthy business model for itself. It is focusing on mobility initiatives and is working towards creating safer, better, and more sustainable vehicles in the future. General Motors is pursuing both hydrogen fuel cell technology and battery electric technology for its clean energy vehicles. The company will launch 20 new all electric vehicles by 2023, of which two are likely to be launched in the next 18 months.
  • The company is moving fast on the self-driving vehicles technology and has started testing these cars in San Francisco and will soon begin testing in New York.
  • In a challenging industry environment, General Motors will continue to take action to adjust production in response to lower demand for passenger cars in North America. The company expects its full year EPS to be in the range of $6 to $6.50.

We will be updating our model for General Motors based on these results which might lead to a change in our price estimate.

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