What Are The Key Sources Of Revenue For General Motors?

by Trefis Team
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General Motors
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General Motors (NYSE: GM), the third largest automaker in the world, operates under four brands – Cadillac, GMC (General Motors truck Company), Buick, and Chevrolet. Though GM had reported an earnings and revenue beat for both quarters in 2018 backed by strong volume sales in North America and China, its stock price has plunged due to its negative outlook. The company has lowered its full-year earnings guidance on the backdrop of increasing commodity costs in the US, negative currency impact on its South American operations, and increased launch costs in China, where the company sells the second highest number of vehicles. GM expects an additional $1 billion cost headwinds in 2018 as a result of these unexpected expenses. We expect $144 billion in revenues for GM in 2018, as compared to $147 billion in 2017.

We have a price estimate of $36 per share for the company, which is slightly above the current market price. View our interactive dashboard – Key Sources of Revenue For General Motors – and modify the key drivers to visualize the impact on the company’s revenue and price. Below, we discuss the major revenue sources for the company.

 

  • GM North-America (74%) – A refreshed product portfolio and quality improvements will help GM to increase its average pricing. Further, higher demand from developing countries will allow the company to further raise its prices. We expect 3.5 million vehicles to be sold in the North American market by GM, with an average price of $32,500 per vehicle, generating revenues of $106.7 billion in 2018.
  • GM International Operations (16%) – GM sells vehicles in the rest of the world (excluding North-America, Europe, and China) under the brand names – Buick, Cadillac, Chevrolet, Daewoo, GMC, Holden, Isuzu, Jiefang, and Opel. Continued investment in a portfolio of technologies will drive higher vehicle sales for GM. We expect 1.3 million units to be sold by this division, with an average pricing of $17,820 per vehicle, translating into $22.7 billion in revenues in 2018.
  • GM Financial (9%) – GM Financial is an automotive finance company specializing in the purchase of retail automobile installment sales contracts originated by franchised and select independent dealers, in connection with the sale of used and new automobiles. We expect $12.8 billion in revenues from this division in 2018.
  • GM China (1%) – GM Chinese operations primarily comprise three joint ventures – Shanghai General Motors (49%), Sai-GM-Wuling Automobile Company (34%) and FAW-GM (50%). We expect 28.25 million vehicles to be sold in China in 2018, of which GM has a market share of around 14.3%. With an average net equity income of $484 per vehicle sold, we expect $2 billion in revenues from the division in 2018.

 

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