By on July 25, 2013

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General Motors said that costs associated with the launch of their redesigned pickup trucks and weaker results in Asia (except for China) lowered net income for the second fiscal quarter of 2013 by 19% from last year, to $1.2 billion.

 

Overall revenue was up 4% to just over 39 billion dollars. Income before taxes, interest and non-recurring items like GM’s purchase of $200 million worth of preferred shares in GM’s Korean subsidiary, was up 7% to $2.3 billion. Even with the rollout costs for the new Chevy Silverado and GMC Sierra, pretax profits in North America were up 4.5% to $2.0 billion. As with Ford, GM’s loses in Europe shrunk, though by a much larger figure, dropping to $110 million from $394 million in Q2 2012. Since coming out of bankruptcy in 2009, GM has made over $19 billion in 14 straight quarterly profits.

Though dealers were selling off remaining stock of the old 2013 pickup truck models, which usually means more cash incentives to move them out to make place for the revised trucks, strong U.S. demand for pickup trucks offset the downward price pressure. Transaction prices for GM’s full-size pickup trucks were up 5% to $36,641. Analysts says that GM makes an average of about $10,000 for every pickup truck they sell.  Silverado and Sierra U.S. sales combined rose 23 percent through June, to 330,219. GM expects the second half of 2013 to be even better than the first, with the all new C7 Corvette Sting Ray and the new, larger Cadillac CTS arriving at dealers.

For GM International Operations, which includes Asia, Australia, and Russia, overall pretax profit was down 64%, to $228 million, though pretax profit in China was up. The weak Japanese yen is creating price pressure in many of those markets.

GM South America made a pretax profit of $54 million, up from only $16 million in this quarter last year.

GM Financial’s profits were up 17% to $254 million.

During the quarter, the price for GM shares went up 20%, surpassing the $33 IPO price for the first time in over two years. The share price got a boost from news that the U.S. Treasury was selling off more of its equity in the automaker, the result of the 2009 bailout, and from GM’s relisting on the Standard & Poor 500 in June. At Wednesday’s close, GM common stock was $37.14.

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52 Comments on “GM Q2 Profits: $1.2 Billion, Down Due To New Pickup Launch Costs...”


  • avatar
    Hummer

    I love pickups as much as the next American, and even with myself wanting to hold judgement until I drive it, I’m having a hard time absolutely hating everything I read, seen in pictures and at the autoshow.

    • 0 avatar
      Detroit-X

      Me too.

      Obtuse styling, underdone from a distance, overdone from up close, apparently done by overacclaimed, trendy-somethings, with their face buried in an iPod.

      Fine engines whose reliability performance is dangling on a string from added EPA (mpg) gimmicks.

      Interiors trying to mimic cars… when many people buy it expressly because it’s not a car.

      AND…. I’m not fooled. GM has launches every year. The pickup launch is just this year’s excuse for GM failing to get the car-business-basics right.

      • 0 avatar
        Hummer

        Exactly, I can’t even find information on a traditional radio setup, from what I’m finding even the base work trucks have the touch screen.

      • 0 avatar
        mike978

        There are launches each year, although you could argue that the trucks are the most important launch. Much like the Corolla and Camry are the most important launches for Toyota every few years.

        • 0 avatar
          Detroit-X

          I agree. The most important launch. Why? Because GM essentially—still–only makes money on trucks. Shame, shame.

          • 0 avatar
            Hummer

            It wouldn’t be a shame, if they at least made the best truck they could at the best price.

            These are filled with crap the people didnt ask for, I don’t want cyclinder deactivation, or lightweight material.

            I consider the GMT800 to be the plateau for GM trucks, minimal “junk”, excellent drivetrain, and quality steel, among other things.

          • 0 avatar
            Detroit-X

            Hummer: To clarify… I meant “shame” as GM doesn’t make money on cars, not shame as in they are spending money on their only continuously profitable option. When your GM, and you don’t understand the fine details of the business, you have to blunder toward the obvious.
            It could be the GMT800 was the pinnacle of GM trucks. I have one; my best vehicle ever. I cringe at the thought that long ago I could have bought something with 2-4 MPG better, but $1000/year more repairs and maintenance required.
            My friends in GM dealership service feel the same way. They report to me that the miles-per-gallon gimmicks added to the 5.3L (for purposes of EPA window stickers, at the expense of the owners) have been a steady detriment to reliability.

          • 0 avatar
            BrianL

            Why do you say that GM doesn’t make money on cars? Sure, the profit margin on SUVs/CUVs and trucks are bigger, but I am pretty sure that GM does make money on the cars that it sells. If not, is only making money in China the CUVs and vans it sells there? With the Cruze, I would have to say that GM is absolutely making money selling the same car in several different markets for very similarly priced competition. GM also has a higher average transaction prices.

            Do you have anything, post 2009, that says GM doesn’t make money on the cars that it sells?

          • 0 avatar
            tuffjuff

            @Detroit-X

            The Chevy Cruze is NOT the Chevy Cobalt, and you can gaurantee they make money on each one sold.

          • 0 avatar
            bd2

            GM does make $$ on cars, even the subcompact Sonic which is built in the US (the Fiesta is built in Mexico).

    • 0 avatar
      tuffjuff

      A Cabela’s opened today in Green Bay (surprising it took this long, given the population up here) and they had a huge pillar with a 2014 Silverado parked on top.

      What a great door prize – you can win a “just now became competitive, several years late” new Silverado!

  • avatar
    Beerboy12

    Toyota, who actually sells cars with Toyota badges on them, sell more cars than GM. None of the cars GM sells have a GM badge…

    • 0 avatar
      Hummer

      If you want to be technical, gm started putting a little GM badge on all of their brands around 2006, although they stopped doing that some time or another.

      • 0 avatar
        Detroit-X

        Yep. GM stopped using the GM badges when
        A. They suddenly realized the badges cost $1 each
        B. They placed them on the vehicle where only a urinating dog can read them
        C. Chicklets called. Wanting their tooling back.

        • 0 avatar
          84Cressida

          I remember when they first started doing that, saying they want all the brands to be interconnected with one another.

          Then in 2010 when they announced they were going to stop, they said it’s because they want each brand to have its “own identity”. Simply hilarious.

          The Cadillac SRX is one car I know that still has the chicklet.

        • 0 avatar
          tuffjuff

          @Detroit-X

          I can tell that you’re a HUGE GM fan.

          • 0 avatar
            Detroit-X

            tuffjuff: Actually, I am a GM fan. They have a lot of great and competitive vehicle choices available now… if people give them a fair shot. GM have tons of extremely talented lower-level people working there, who have single-handedly kept the company viable, in spite of their poor-and frequently clueless-leadership. The decision makers are the ones who deserve the “tough-love.” They are NOT earning their money.

      • 0 avatar
        raph

        The GM “chicklit”, people hated it, A lot owners grabbed a hair dryer and removed them.

    • 0 avatar
      APaGttH

      Yup – and average incentives on the Camry are up to $3100 per unit and Toyota is up to 20% fleet sales. Go Toyota!!!

      • 0 avatar
        bd2

        The Camry and Corolla have among the lowest (if not the lowest) average transaction prices for their respective segments.

        The Camry even has a lower ATP than the much maligned Malibu.

  • avatar
    Big Al from Oz

    How many pickups did Detroit have sitting around in the second half of last year? How big were GMs deals on pickups to move them out of the lots?

    I think the GM strategy of trying to sell the most vehicles rather than be the most profitable isn’t a good plan.

    The biggest or largest doesn’t mean you are doing better, especially if you run at a loss.

    • 0 avatar
      84Cressida

      In my area, they’re offering $9000 cash back on Silverados and Sierras according to their commercials, where seemingly every single month is “Chevy truck month”. My local dealers still have plenty to go around.

      • 0 avatar
        APaGttH

        Link please to $9K cash back offers

        • 0 avatar
          ajla

          I haven’t seen $9K, advertised yet. What I have seen as pretty standard is $7500 cash allowance plus a $1500 “option discount”. So radio ads are probably adding those two numbers together and saying “$9000 off!!!!!”

          They also want you to trade in a ’99 and newer vehicle, although I’m not sure how strict they will be on that stipulation.

          Dealers don’t want the last gen hanging around on the lot too long, so big discounts aren’t surprising.

          Here’s some links:

          http://chevroletsalinasca.mychevrolet.org/wp-content/uploads/2013/07/2013-chevrolet-silverado-model-year-end-event-incentives-promo-731×200.jpg

          http://www.carlblackkennesaw.com/flash/main/images/2013/july/kennesaw-gmc.jpg

        • 0 avatar
          84Cressida

          Link please to $3100 incentives on Camrys.

    • 0 avatar

      GM does not have a strategy of selling the most vehicles, it is simply a result of being the largest automaker. The strategy is to build and sell the world’s best vehicles and with that comes the sales.

      Those in the industry realize that the truck inventory was bloated to prepare for the shutting down and re-starting of the 3 assembly plants that make the truck. 1 of them has not been producing the 900 since March, one since early July and the last one will be down in a couple months. What is the number of days inventory on the old trucks today? About 70 days and dropping everyday with only 1 of 3 plants producing.(for reference F150 has 68 days). And if you did some research, you would see that ATP (average transaction price) on the ’13 trucks is actually up 5% this June compared to 2012. Looks like that plan is working out very well…

  • avatar
    APaGttH

    I’ve felt a disturbance in the force.

    Like a million Bertel’s cried out at once, and were suddenly silenced.

    In other news Consumer Reports gave the 2014 Chevy Impala it’s highest rating to any 4 door gasoline powered car – ever. 95 out of 100, dethroning the Lexus LS460

    • 0 avatar
      tuffjuff

      +1,000,000

    • 0 avatar
      shaker

      I just read that, and was pleased to see it – just hope they can convince buyers that the New “$39,110 Impala” (LTZ trim, as tested price) is way better than the old one (no offense to owners of the old design).
      The base price is around $27,000, but that’s with the 2.5 though, while perfectly adequate for the Malibu, is no match for the Impala’s heft.

      CR placed it at the top of their “Upscale Sedans” category where it outscored the Genesis V6 (92), Toyota Avalon Hybrid Limited (86), Chrysler 300 Limited V6 (83), Acura TL (82).
      The Impala comes up slightly above mid-pack pricing-wise, so it rated better than several cars priced considerably higher.

      It’s good to see that GM is getting serious about improving the quality of their vehicles, considering the investment made by the taxpayers (which, I understand, is not viewed as universally positive).

      I hope that GM keeps up the good work and does well, and also doesn’t forget that they should invest in the home country that bailed them out.

    • 0 avatar
      NormSV650

      So funny that Chevy is being compared to Lexus. Japanese fanbois have really lost sincebertel left.

      Rock bands and all!

      http://m.autoblog.com/2013/07/26/2014-chevy-impala-used-as-recording-studio-for-detroit-band-video/?post=1&icid=autoblog_river_article

      • 0 avatar
        APaGttH

        It isn’t just the losing out, Consumer Reports compared it in the article to the RLX, A6 and LS460. It blew away the current Avalon in review also.

        Can’t wait to hear the wails of a million Bertel’s when the “over priced” SS comes out.

    • 0 avatar
      bd2

      LOL!

      And things will only get better for GM as Cadillac really starts to get going with the new CTS, ELR and Escalade – followed by several other new models.

      The XTS is selling well on China and when LWB ATS should also do well when production starts in China.

  • avatar
    CJinSD

    You really need to learn to use Google. Then you could find all the $9,000 discounts on 2013(and leftover 2011) Siverados advertised on the internet. You’d also have found that the Lexus LS460 scored a 99 out of 100 in Consumer Reports testing. That’s better than 95 out of 100, just in case you didn’t know that either. http://www.consumerreports.org/cro/video-hub/cars/upscale–luxury-sedans/lexus-ls-460l-20072012-review/111757961001/1283221522/

    • 0 avatar
      APaGttH

      and another…

      http://www.nydailynews.com/autos/consumer-reports-aglow-2014-chevrolet-impala-article-1.1408811

    • 0 avatar
      APaGttH

      Gee I don’t know – I used Google just like you said and lots of stories about the Impala being the topped rated sedan, ever – even calling out the defeat of the LS460.

      http://www.washingtonpost.com/business/new-chevrolet-impala-posts-highest-score-of-all-sedans-in-consumer-reports-testing/2013/07/25/569f9086-f514-11e2-81fa-8e83b3864c36_story.html

      Maybe Bing will have your desired results?

      • 0 avatar
        KixStart

        APatGttH,

        You said, “highest rating… ever.” It is not. The LS did better. Perhaps it was some years ago but that’s part of “ever.”

        • 0 avatar
          84Cressida

          Hey now, don’t get in his way of trying to silence us “bertels” who dare speak GM’s name in vain or not have blind, irrational hatred for Toyota.

    • 0 avatar
      SC5door

      The 2007 to 2012 model received a 99 out of 100. Problem is the car was seriously updated for the 2013 model year with that stupid mouse controller.

      Provide the link saying the 2013-2014 LS 460 scores a 99 out of 100 then.

  • avatar
    APaGttH

    Please submit arguments to Consumer Reports

    http://www.mercurynews.com/cars/ci_23732822/2014-chevrolet-impala-is-top-sedan-consumer-reports

    • 0 avatar
      CJinSD

      My link is to Consumer Reports’ review of the Lexus LS460 on Consumer Reports’ own website. They gave it a 99/100. Perhaps you shouldn’t trust the media. I’m impressed with your willingness to refute a linked article from the original source with 2nd hand sources. You’ll go far in the propaganda business.

      • 0 avatar
        SV

        Consumer Reports did give the LS460 a 99 – in 2006, seven years ago. The current LS rates a 92 I believe, 3pts lower than the Impala. I remember the E39 5-series getting close to a perfect score back in 2001 as well.

        I think CR meant that the Chevy is the highest-rated of all current sedans, not necessarily the highest of any sedan ever (and the comparison with older models is not very relevant anyway as CR seems to toughen their grading scale over time). At any rate, a very impressive achievement for GM.

        • 0 avatar
          NormSV650

          Who buys a brand new 2006 Lexus? CJ is sneaky like that.

          The new Impala is hugh so I can see where it can top others in crashes. But funny it shares the same frame rails as the Epsilion ll cousins theLaCrosse and Malibu(similar to the Epsilion l Saab 9-5) who haven’t faired as well.

        • 0 avatar
          APaGttH

          Shhhhhhh….details, and I have propaganda to spread! Bwhahahaha!

          CJ had a puppy run over by Roger Smith when he was 7 and he never got over it. I seem to remember he drives an Audi, the pinnacle of reliability and fit and finish.

        • 0 avatar
          CJinSD

          “In other news Consumer Reports gave the 2014 Chevy Impala it’s highest rating to any 4 door gasoline powered car – ever. 95 out of 100, dethroning the Lexus LS460″

          Shill boy said ‘ever.’ His word. Were the years 2007-2012 parts of ever? Sorry. I don’t even know anyone ignorant enough to make your arguments. I doubt anyone here is clueless enough to take them seriously. Why do you bother? Are you fluffing each other in some sort of circle jerk, or are you just trying to earn your checks from a company that needs to employ shameless liars to sell their garbage? Do your checks wear the same routing numbers that the sellouts at CR’s do?

      • 0 avatar
        bd2

        Are we talking about the same Lexus that is increasingly relying on cheaper, FWD models for sales?

        • 0 avatar
          84Cressida

          No, we’re talking about the Lexus that is unveiling all-new cars that are being universally praised for their luxury, reliability, resale, comfort, and now driving dynamics that topple the previous benchmark. Compared to BMW who relies on 320i leases with vinyl seats to lure suckers into the showrooms and Cadillac who’s flagship is a Tahoe with chrome, Lexus is well on its way to re-defining itself.

          And then there’s Hyundai, who you work for Agnes, which just fails at luxury cars in every sense of the word.

  • avatar
    Lorenzo

    So should we credit this good news for GM to the new guy Akerson, or is it because of the old guy Whitacre, the industry having long lead times and all?

    • 0 avatar
      doctor olds

      Akerson is it, since it is on his shift. With the long lead times though, credit really belongs to Wagoner and Lutz. Whitacre was CEO a short time and had very little impact on products in production now. Akerson will deserve credit or otherwise for vehicles launched in the coming few years, to the extent that any CEO does.

      Lutz’ assignment was to create a superb product development process and organization. Wagoner was wise enough to bring him on board.

  • avatar
    JaySeis

    Hilarious headline. Could’ve just as well said: GM profits down ’cause that’s the price of doing business. OR: GM profits down because they paid their workers. Or the best of all; GM profits up because their no longer launching new pickups.

  • avatar
    Baba

    Says a lot about the Impala that high priced Lexus cannot overtake the Chevy this year. I have sat in and driven the new Impala. It is outstanding in all areas.


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