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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.

GMC to get own model not shared with Chevy?

For years, GMC has existed as a brand without a single unique product, reconstituting Chevrolet trucks, SUVs and crossovers with more frosting in exchange for a few extra dollars. The Sierra is a Silverado, the Acadia a Traverse, and the Terrain an Equinox, although admittedly the latter pair are visually differentiated to a significant degree.
GMC could be set to expand beyond its Chevy-based roots, though. During last week's Detroit Auto Show press days, GM's product boss Mark Reuss was asked whether there'd ever be a GMC that wasn't taken from Chevy. "Oh, yes, you will," Reuss told the media. "The health of GMC is astonishingly good from a consideration standpoint." Reuss wouldn't elaborate on what the model could be, although we're quite happy to make some guesses. GMC has its bases fairly well covered, with a mid-size and full-size crossover, as well as a mid-size, full-size and HD pickup. We doubt GMC will be building a family sedan, sports car, or hatchback, so really, the only place we can see the brand going is into a smaller crossover.
Automotive News points out that the most recent small GMC showcar, the 2010 Granite concept (shown above), won't see production according to General Motors. That vehicle likely would have rode on GM's compact vehicle architecture, known internally as Gamma II, which underpins the Chevy Spark and Sonic, as well as the Buick Encore (and its overseas Opel/Vauxhall/Chevy counterparts).

GM sweetens military discount for Buick, Chevy and GMC

American servicemen and women interested in a new vehicle from Chevrolet, Buick or GMC now have a bit more incentive to head down to their local dealer, as General Motors has announced plans to improve its military discount program.
The new GM Military Discount Program offers eligible consumers a new Chevy, Buick or GMC at invoice pricing, which in some cases can take very large chunks out of a car's retail price. When factored in with other incentives, most of which are available with the Military Discount, the bargains are thick on the ground for members of the US armed forces.
GM's Retail Sales and Marketing Support general manager, Chuck Thomson, said, "GM has long supported the military and military families, and we hope this simplified and enhanced discount will show our appreciation for their service and help make it easier for them to own one of our great new vehicles." The program is open to all active duty and reserve members in the Army, Navy, Marines, Air Force, National Guard and Coast Guard, as well as veterans that have been out of the service for less than a year. Military retirees and their spouses are also eligible for the discount.