Whereas Chrysler’s surprise operating profit in the first quarter of this year was achieved mainly through cost-cutting, GM’s just-announced Q1 profit comes on the strength of sales increases in most of its global markets. Though The General’s sales numbers are still lower than they need to be, momentum is headed in the right direction… albeit somewhat more slowly than had been hoped.
GM’s long-suffering North American operations came roaring back on the strength of major capacity reductions and steady sales improvements. GM’s NA capacity utilization hit 84.8 percent last quarter, up considerably from Q1 2009′s low of 37.7 percent. By volume, North American sales were up over Q1 2009 as well, with each of GM’s core brands gaining sales.
On face value, these numbers appear to be incredibly rosy for a North American division that was long supported by overseas operations. Digging a little deeper though, it seems that GM is actually just trading water in terms of market share. GM’s US car market share was down even compared to its miserable Q1 results, having lost about half a percent. Truck market share improved by .7 percent, leaving total US market share a wash compared to Q1 2009, at 18.4 percent.
Perhaps the most troubling numbers in GM’s Q1 results have to do with GM’s US retail/fleet mix. In Q1 2009, 20 percent of GM’s car business went to fleets; last quarter, that percentage doubled to 40 percent. Truck fleet percentages increased more moderately, from 15.2 percent to 24.5 percent. GM’s combined US fleet sales mix was 31 percent. That The General was able to turn a profit on its NA operations with those kinds of numbers shows that cost-cutting as well as a sales push were necessary for GM’s Q1 profit.
GM Europe remains the company’s most troubled division, losing half a percentage point of market share, and over half a billion dollars. Opel/Vauxhall shed about two thousand units compared to Q1 2009, while Chevrolet added about 7k units in Europe over the same period. GM’s “other” brands dropped another 8k units of volume, dragging the division to an overall decline.
GM International, which includes the growth markets of China and Latin America, improved its market share by .3 percent over its Q1 2009 result, despite steady increases in volume across all brands.
GM’s surrender of its majority stake in Shanghai GM did not prevent GM from recording the JV’s sales as part of its global market share, though its income from that venture only shows up in the heading “equity income, net of tax,” which contributed $403m to the bottom line. Though Chinese sales are showing signs of slowing since the end of Q1, GM stands by its prediction that its sales there will exceed 2m units this year, according to Automotive News [sub].
More details on GM’s Q1 financial results following the company’s 1pm Eastern conference call.