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GM profit dips on truck changeover, but beats estimates

DETROIT — General Motors on Thursday reported a higher-than-expected quarterly profit despite a drop in production of high-margin pickup trucks, as it gears up for new models that are expected to boost profits next year. Like rivals Ford and Fiat Chrysler Automobiles, GM is banking on highly-profitable Chevy Silverado and GMC Sierra pickup trucks to lift profits, as consumers shift away from traditional passenger cars in favor of these larger, more comfortable trucks, SUVs and crossovers. During the first quarter, the process of changing over to GM's new pickups resulted in a drop in production of 47,000 units. GM Chief Financial Officer Chuck Stevens said the production drop had resulted in a drop in pre-tax profit of up to $800 million. Earlier this year, GM said its 2018 profits would be flat compared with 2017, but expected its all-new pickup trucks would boost margins starting in 2019. On Thursday, GM reiterated its full-year 2018 forecast for adjusted earnings in a range from $6.30 to $6.60 per share. The automaker said capital expenditures were more than $500 million higher in the quarter because of investments its new pickup trucks and a family of low-cost vehicles under development with Chinese partner SAIC Motor Corp. On Wednesday, rival Ford said it would stop investing in most traditional passenger sedans in North America. CFO Stevens told reporters on Thursday that GM has "already indicated that we will make significantly lower investments on a go-forward basis" in sedans. 2019 GMC Sierra View 21 Photos GM benefited from a lower effective tax rate in the quarter, but adjusted pre-tax margin fell to 7.2 percent from 9.5 percent a year earlier. Stevens said the company's profit margin should hit 10 percent or higher in the second quarter and for the full year. GM said material costs were $700 million higher in the first quarter, and it expects those costs to continue rising. The automaker said it would counter those increases with cost cutting measures. "It is a more difficult environment than it was three or four months ago," Stevens said when asked about rising commodity prices from potential steel and aluminum tariffs announced by the Trump administration. "But we are confident we can continue to offset that." The company reported quarterly net income of $1.05 billion or $1.43 per share, a drop of nearly 60 percent from $2.61 billion or $1.75 per share a year earlier. Analysts had on average expected earnings per share of $1.24.

2021 Chevy Silverado, GMC Sierra fuel economy to go down due to global chip shortage

Production of the 2021 Chevy Silverado and 2021 GMC Sierra is continuing, but the global semiconductor chip shortage is resulting in a mid-year change. Or rather, an omission.  Basically, the availability of cylinder deactivation for the 5.3-liter V8 will be significantly reduced, resulting in a reduction of 1 mpg combined for affected models. This applies whether that engine has the six- or eight-speed automatic, as well as to both the regular Active Fuel Management and the more advanced Dynamic Fuel Management cylinder deactivation systems. DFM does remain with the pairing of 5.3-liter V8 and 10-speed automatic that comes standard on the LT Trail Boss and High Country. "Due to the micro controller shortage, the components that control AFM/DFM in the engine control module (ECM) have been removed," GM spokesperson Michelle Malcho told Autoblog. She also indicated that the engines will still have the AFM/DFM hardware in place, but that GM will not allow activation of the systems in the future with an ECM change.  Malcho also confirmed to Autoblog that the Silverado and Sierra's other engines will continue to have AFM and DFM, including the 2.7-liter turbo inline-four, 4.3-liter V6 and 6.2-liter V8. In an earlier statement to Reuters, she declined to say the volume of vehicles affected. "By taking this measure, we are better able to meet the strong customer and dealer demand for our full-size trucks as the industry continues to rebound and strengthen," Malcho wrote Reuters in an email. The change runs through the 2021 model year, she said. Malcho told Reuters it would not have a major impact on the Detroit automaker's U.S. corporate average fuel economy (CAFE) numbers. "We routinely monitor our fleet for compliance in the U.S. and Canada, and we balance our portfolio in a way that enables us to manage unforeseeable circumstances like this without compromising our overall (greenhouse gas) and fuel economy compliance," she said. GM's fleetwide fuel economy in the 2018 model year was 22.5 miles per gallon and was projected to rise to 22.8 mpg for 2019, according to a report by the Environmental Protection Agency. To meet federal CAFE requirements, automakers like GM often use credits from either earlier years where they faced less stringent rules and performed better than the requirements or buy credits from other automakers. GM said last month the chip shortage could shave up to $2 billion from this year's earnings.

GM recalling over 40,000 Chevy, Pontiac and Saturn models over fuel pump woes

The National Highway Traffic Safety Administration has issued a recall for a number of General Motors cars and crossovers bought or currently registered in the hot-climate states of Arkansas, Arizona, California, Nevada, Oklahoma and Texas. As many as 40,859 units consisting of the 2007 Chevrolet Equinox, Pontiac Torrent and Saturn Ion and the 2007-2009 Chevrolet Cobalt (shown) and its Pontiac G5 twin are being recalled for potential fuel leaks.
This recall is being issued due to potentially faulty fuel pump components that can crack and cause gasoline to leak from the return or supply ports and possibly cause a fire. NHTSA has not indicated how many fuel leaks or vehicle fires have been reported. As a fix, GM will replace the fuel pump modules on all affected vehicles free of charge. Since Pontiac and Saturn have been shuttered, owners will be able to go to another GM-brand dealership to have their vehicles repaired.
While the list of affected cars and crossovers varies by state and model year, if you own any of these models and live in Arizona, California, Florida, Nevada, Oklahoma or Texas, be sure to check the official notice below for more details.