COGS Driving General Motors Total Expenses?

October 25th, 2019 by Trefis Team
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General Motors (NYSE: GM) has its expenses largely clubbed under its cost of goods sold, which accounted for about 95% of the company’s total expenses in 2018. This is in line with the previous few years as COGS has remained around 90-94% of Total Expenses. Over the years, GM has seen fluctuating Revenue while its Cost of Goods Sold (as a percentage of Revenue) declined till 2017 but went back up to 90.4% of Total revenue in 2018. Due to this the Net Income margin went down from 6.4% in 2015 to 5.4% in 2018. Trefis expects the margin to be around 7% in 2019.

You can view the Trefis interactive dashboard – General Motors: Breakdown Of Total Expenses – to better understand how the company’s total expenses have moved over the years and what is causing this change. In addition, here is more Consumer Discretionary data.

 

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Total Expenses:

  • General Motors’ total expenses have fluctuated from $142.7 billion in 2015 to $157 billion in 2016 and down to $139 billion in 2018.
  • Most of this was driven by a high fluctuation in cost of goods sold (COGS).

Following is how each expense head has moved over the years. For more details of each expense please visit our interactive Dashboard on General Motors’ Total Expenses:

  • COGS, which is 90.4% of GM’s total revenue (in 2018), includes Automotive cost of sales and GM Financial’s operating expenses. COGS as % of Revenue has declined over the years from 88% of Total revenue in 2015 to 86.5% of Total revenue in 2017. In 2018 it rose to 90.4% of Total revenue. Trefis estimates the metric to go down to 88.7% of Total revenue in 2019.
  • Selling, General and Administrative expenses, which contribute 6.6% to GM’s total revenue (in 2018), includes advertising and marketing cost, selling and distribution expense, and other general expenses. Selling, General and Administrative expenses as % of Revenue fell in 2018. Trefis estimates the metric to fall slightly to around 6.3% of Total revenue in 2019.
  • Interest expenses have been increasing over the last few years in both absolute terms and as % of Revenue. The metric has increased from 0.3% of Total revenue in 2015 to 0.4% of Total revenue in 2018. Trefis estimates the metric to increase a bit to 0.5% of Total revenue in 2019.
  • Equity Loss (Income) has been fluctuating over the last few years in both absolute terms and as % of Revenue. The metric has changed from -1.4% of Total revenue in 2015 to -1.5% of Total revenue in 2018. Trefis estimates the metric to go back to -1.4% of Total revenue in 2019.
  • Other Expenses (net) includes other non-operating expense (net of income) and Loss from Discontinued Operations. The metric went up to 2.7% of Total Revenue in 2017 due to a high loss due to discontinued operations in that year. In 2018 the metric was recorded at -1.7% of Total Revenue and Trefis estimates it to be around -2.5% of Total Revenue in 2019.
  • Income Tax expenses saw a sudden rise in 2017 primarily due to the $7.3 billion tax expense related to U.S. tax reform legislation and the establishment of a $2.3 billion valuation allowance related to the sale of the Opel/Vauxhall Business. In 2018 it went back to around 0.3% of Total Revenue. Trefis estimates in 2019 the metric to increase slightly and overall Income Tax to be around 1.4% of Revenue.

 

 

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