By on April 22, 2016

 

Ren Cen. GM

There’s happy faces inside the Renaissance Center today.

General Motors saw its first-quarter pretax profit rise 28 percent, despite continuing trouble in foreign markets, Automotive News has reported.

A net income of $1.95 billion means investors will reap $32.66 a share, a 1.5 percent increase. Revenue was up four percent in the first quarter, at $37.27 billion.

Though global sales were down, GM managed to cut its losses in problem markets, especially South America, where the automaker posted a $67 million loss (down from $214 million the year before). In Europe, GM trimmed its $239 million Q1 2015 loss to just $6 million, the result of a product push by Opel. Chinese sales were flat.

The automaker pulled out of Russia last year amid that country’s protracted recession, and those costs are still being felt on the balance sheet. Despite a smaller footprint in the fleet market, GM sales rose 1.2 percent in North America, with profits up five percent over this time last year.

While problems and pressures continue for GM, it — and other automakers — can take comfort in the fact that it isn’t Volkswagen.

The embattled German automaker’s financial information has been delayed ever since the diesel emissions scandal broke last September, but the Wall Street Journal reports that the company saw a net loss of 1.58 billion euros ($1.77 billion) in 2015.

Volkswagen’s operating loss in 2015 was 4.1 billion euros ($4.6 billion). Compare that to the net profit of 10.85 billion euros ($12.19 billion) it recorded a year earlier.

Earlier today, Volkswagen announced it will set aside $18.2 billion to deal with the fallout of the emissions scandal.

Get the latest TTAC e-Newsletter!

36 Comments on “GM Profits Soar, and Volkswagen is the Anti-GM...”


  • avatar
    zip89105

    I’ll take my chances with Volkswagen, whose ignition switches never killed anyone.

    • 0 avatar
      EX35

      hard to be killed when you can’t leave your driveway.

    • 0 avatar
      alexndr333

      Poisoning everyone a little bit is acceptable?

      • 0 avatar
        JohnTaurus_3.0_AX4N

        Not to mention doing it on purpose. Its not like GM planned ahead to install faulty ignition switches, although they did deserve some grief for not acting sooner.

        • 0 avatar
          Phillin_Phresh

          In this case, GM’s sin was recognizing that they had a mechanical problem that could jeopardize life safety and not acting on it. There’s no excuse for negligence.

          I happen to work at a large national company that houses over 30,000 people. It’s nothing special, and what I do there is nothing special, but last week they discovered that one of their suppliers didn’t tell them about a product recall that could pose a small potential fire hazard. Within hours, that supplier got reamed and will probably be replaced very soon.

          You don’t screw around with human life.

    • 0 avatar
      hifi

      No matter what car you drive, it’s probably not a good idea to hang a large collection of Hello Kitty charms from your keychain. I’d be more concerned driving a Honda, Toyota or any car with an airbag that will shoot shrapnel into your jugular.

  • avatar
    Robbie

    In a changing automotive world, one thing remains always constant: GM is still with its old creative bookkeeping tricks.

  • avatar
    wsn

    Only a fool would actually believe that GM is making a real profit. Mark my words, they will manipulate accounting such that they will post a small “profit” to justify bonuses and then suddenly write off a huge “one time charge”. Rinse and repeat until the next bailout.

    Edit: Just saw Robbie’s comment. Yes, great minds think alike.

    • 0 avatar
      Lorenzo

      That announced net is barely 5% of revenue, about the percentage Ford earned for all of 2015. That’s not quite the low margin on high revenue for supermarkets, but it’s low enough to make guys like Warren Buffett wince, considering the high investment needed. There’s no reason to doubt GM’s accounting, unless you forgot they offloaded billions in liabilities in the “pre-planned” bankruptcy, especially those legacy pension and health care costs. You could even make the argument the net should be much higher, since they’re barely matching Ford, which didn’t benefit from screwing their retirees and bondholders.

      • 0 avatar
        wsn

        Calm down.

        It’s called creative accounting. There are so many items that they can use or delay to get the “profit” figure they want (for the short term). It’s cyclical. Give it another 10~20 years and GM’s market share will shrink further and in need of another bailout.

  • avatar
    Russycle

    “A net income of $1.95 billion means investors will reap $32.66 a share, ”

    That’s an interesting use of “reap”. There’s about 1.5 billion shares of GM outstanding, so that $1.95 billion works out to a buck and change per share. If you mean the share price is $32.66, OK I guess, but you’re not reaping unless you sell, and in that case “reap” would suggest the difference between the buy price and the sell price. If you buy something for ten bucks then sell it for eleven, did you really “reap” eleven dollars? Moot point anyway, the price has dropped to $32.17, so nobody “will reap” $32.66.

    Sorry to be a pedant, but words have meaning, at least they’re supposed to. And stock analysis is best left to stock analysts…and even then they’re usually wrong.

    • 0 avatar
      Ron

      +1 on both words have meaning and snarky comment on stock analysts. (And I’m a recovering stock analyst)

    • 0 avatar
      hybridkiller

      I found that “reap” statement to be rather annoying as well. The only thing I’ll add is that only a minor portion of EPS (earnings per share) actually goes to shareholders in the form of quarterly dividends – they will “reap” $0.38 /share for Q1.

    • 0 avatar
      el scotto

      Accuracy and comprehension are really just by-products of anything the Steph cut and pastes into TTAC. Clickbait and pleasing the Baruth boys are it’s number one goals. Accuracy and relevant writing? Not a chance. Then again, clickbait is just another form of pleasing digital manipulation.

  • avatar
    Speed3

    Considering their vehicles are mediocre at best you think they would invest that in R&D and quality control.

    But this is GM so we know it’s going to be dividends and share buybacks.

    • 0 avatar
      alexndr333

      Let’s see:
      Best hybrid? 2016 Volt (Car and Driver)
      Best EV? 2016 Spark EV (Car and Driver)
      Best compact? 2016 Mazda 3 – which no one buys (Car and Driver) Smoothest ride? Cruze
      Best mid-size? 2016 Mazda 6 – which no one buys (Car and Driver) Take your pick between Accord, Fusion, Camry, Malibu. Smoothest, most quiet ride? Malibu.
      Best full-size? Maxima, with Impala third ahead of FCA’s 300, but first in sales.
      Best pony car? Toss-up – Sales say Mustang, performance metrics say Camaro
      Best mid-size truck? Colorado / Canyon (anyone but a Toyota fan will say so)
      Best full-size truck? Brand loyalty controls this one. Chevy / GMC’s trucks hold their own.
      So, your “mediocre” comment is either 1) obsolete, 2) maintained by you because you just like hating something, or 3) based on assuming anything below an S-Class is mediocre.

      • 0 avatar
        wsn

        Best hybrid? Prius (buyers)
        Best EV? none exist in significant number. If there has to be one, it will be Tesla.
        Best compact? Corolla and Civic (buyers)
        Best mid-size? Camry and Accord (buyers)
        Best full-size? not a significant segment
        Best pony car? does it even matter?
        Best mid-size truck? does it even matter?
        Best full-size truck? F150, but yes brand loyalty controls this one.

        There isn’t any class that GM is No.1 at. It does have a full line up of second tier models though.

        • 0 avatar
          alexndr333

          You want to equate “best” with “best-selling”? So the Corolla and Camry are the very best cars there out there, according to you. The Accord is worse than these Toyotas because it’s third in sales (in 2015). Look, I get it that you hate GM and will muster any and every argument to bolster your position. But why do that? Just simply declare that you are too sophisticated to ever forgive GM for its lousy management and the US government for Bush’s quick-rinse bailout. Then, you might have some honesty about you, if not credibility.

        • 0 avatar
          Frylock350

          @wsn,

          You also don’t get to dismiss a segment because you don’t think it matters. How many Impalas does GM sell versus Prii for Toyota? How about Camaros vs Prii?

          The Tahoe and Corvette are number one sellers. GM stranglehold on the full-size SUV market is epic. The F-150 is outsold by the Silverado 1500. The F-series (250/350/450/etc included) outsells the Silverado series.

  • avatar
    mikehgl

    Can’t GM make a healthy profit without being dissed? Good to see them turn some healthy profits. We have leased an 16′ Nox and it hasn’t had one issue. I’m a GM supporter, yes, but not a fanboy.

    • 0 avatar
      mcs

      @mikehgl “Can’t GM make a healthy profit without being dissed?”

      I have a couple of theories about that one. I think there is one group that’s upset about us bailing them out only to see them set up factories in Mexico and China. There are people on this site upset with Chinese Buicks and Chinese Hybrid Cadillac CT-6s being imported to the US.

      There is also another group that still remembers the low quality in the past. My parents gave me a brand new Chevy to go off to college 900 miles away from home. Not only was I stranded numerous times, but brand new dealer loaners stranded me too. Not a good thing when you are a teenager 900 miles from home by yourself for the first time. Meanwhile, Dad’s brand new Corvette was had all sorts of issues and I remember one drive in it with him having to reach outside the passenger window to release the wipers that were hanging up on each other intermittently. Even recently, my son remembers having to give rides to his friends because of the numerous failures of his friends GM cars.

      Maybe GM is better now, but as an illustration, let’s pretend for a moment that D-Con rat poison was to try to reinvent itself as a maker of organic baby food. It might be the best organic baby food out there, but there would still be a number of people that wouldn’t be able to get past the fact that the brand used to be rat poison and wouldn’t be able to feed it to a baby no matter what. That’s the problem some of us have with GM.

      • 0 avatar
        Speed3

        I’m actually a huge GM fan, I am just very critical. I am glad we bailed them out. I think it was far more effective than other government measures. I don’t care about moving production to Mexico and to a lesser degree, Canada. There is an argument that if it wasn’t for NAFTA to help keep costs down for domestic and foreign automakers, almost all NA auto manufacturing would have moved to Asia.

        What bothers me is that with the exception of a few products, they are still making mediocre vehicles. Are they even trying? I think it’s too little too late. Tesla & Friends are around the corner and will remake the auto industry.

        • 0 avatar
          mcs

          @speed3. Even with the Bolt, there are little issues that are starting to come to light. The base model doesn’t include some to the safety related features like lane keeping etc. and biggest of all, the CCS quick charge feature isn’t included either. To get a Bolt equipped the same as a Model 3 you’d probably have to pay in the low $40k range. We’re looking at possibly $7k more for a Bolt that doesn’t have nearly as good of a charging network as the Model 3.

        • 0 avatar
          JimZ

          “Tesla & Friends are around the corner and will remake the auto industry.”

          Tesla is going to first have to figure out how to assemble cars correctly.

        • 0 avatar
          Carlson Fan

          Sorry but nothing about a Tesla impresses me. No doubt they look great but the battery pack in my 2013 Volt is engineered head and shoulders above what you get with a Tesla. I suspect the rest of the car will hold up as well, probably better than any Tesla. Don’t agree? Get ahold of me in 2025 after I’ve handed the Volt down to one of my 3 boys to drive to high school and the battery pack is still performing like it did last week. Which BTW my range indicator was telling me 50 miles after over 3 years and 37K miles.

          Anyone who thinks GM doesn’t have the people to engineer & manufacture some of the best cars in the world when executive management isn’t tying their hands behind their back needs to step away from the computer and out in the real world.

          Which BTW is why I’m glad we bailed out GM. The idiots at the top in the corner offices who ran the company into the ground with their short sighted next quarter planning could have been marched off a cliff for all I cared. But the design engineers, manufacturing engineers, planners, purchasers and all the countless others that make a manufacturing company the size of GM run, well I’m glad they still have jobs.

    • 0 avatar
      wsn

      “Can’t GM make a healthy profit without being dissed?”

      From recent history, GM can’t make a healthy profit.

  • avatar
    Jeff S

    I am one who would rather see GM make a profit and stay in business. At least then I feel like it was worth the Government loans. The newer GM products are much better than the ones they replaced. I have a 99 S-10 pickup that I bought new 17 years ago that is still running strong with no ignition switch problems. I would buy a GM or a Ford product over a Fiat Chrysler product any day. I would take a Honda, Toyota, Hyundai, Mazda,or Kia over a VW. Although I am not a VW fan I do not cheer for the diesel gate or other problems they are having.

  • avatar
    RRocket

    I note you said “pre-tax” profits. It’s my understanding that GM will still pay next to nothing in tax due to the sweetheart bailout deal….

    • 0 avatar
      highdesertcat

      And why should they pay taxes? They’ve already got at least $10Billion in bailout money and the best wishes of the American taxpayers.

      It takes creative accounting to show a profit when they’re still more than $10Billion in the hole.

  • avatar
    Jeff S

    The verdict on the effectiveness of the GM and Chrysler bailouts is still out. Fiat Chrysler is the weaker of the two and GM does seem to be doing better but still has a ways to go. The taxpayers will not give either another bailout so both will either have to make it or disappear. GM has much better products than they had few years ago. Hopefully GM has learned from their mistakes. It doesn’t help the consumer or the industry as a whole for a corporation like GM, Chrysler, or VW to suffer. Overall everyone suffers from the failure of a company because it effects not only those employed by that company but businesses supported by that company and businesses that are supported by the employees of that company. We don’t live in a bubble.

  • avatar
    jim brewer

    I’d say that the bailout obviously worked. There is still a problem of chronic excess capacity out there, though.

    The American economy has been consolidating in consistently anti-competitive ways for decades, so that Americans now pay more for an airplane ticket than does heavily unionized Europe.

    Enjoy your discounted lease deals while you can because they won’t last.

  • avatar
    Vetteman

    GM is showing a profit in large part because of where we are in the auto cycle . Full size Pickup sales are very strong and the pricing and large profits they generate are reflecting this . I totally agree with Heavy Handle that the company is totally dependent on the truck portions of their business for any profitability . It has been this way for 30 years . Their cars of the 80’s and 90’s drove off legions of loyal GM customers to Honda, Toyota etc. All my friends and family who had GM cars in the past would not even consider buying one today . A truck yes would be considered but not like in the past when they would only look at GM now they shop for the best product no matter what the brand is . If you are shopping for a new full size truck like I have recently what strikes me is the high price of GM trucks in relation to other brands for what you actually get . As to GM being a healthy company just look at its market share here in the states Thru March GM is up 0.9 percent versus the whole market increase of 3.2 percent Look at their year over year market share . Its been going down for over thirty years I remember their big push to hold 29 percent back in the late nineties Year to date thru march 15.8 percent They are profitable now because of an extremely strong 17 million plus annual sales year that is probably at a cyclical peak right now combined with a normal mid to late recovery high demand for light trucks . Any weakness going forward in the economy will throw this company in the red very quickly . I am surprised with as good as this market is and how much they have raised their vehicle prices that they are not booking muck larger profits like they have in past boom periods for the auto business

    http://online.wsj.com/mdc/public/page/2_3022-autosales.html

  • avatar
    Eyeflyistheeye

    Speaking of GM and Ford, I still don’t like how GM has too many competitors in each segment and nothing is rationalized.

    Why does GM need a crapbox B-segment car in the Spark/Karl and an overstyled but cramped one in the Adam that’s not even sold outside of Europe? Or a Sonic and a Corsa?

    Why does GM need a Cruze and an Astra in the C-segment when Ford makes do with the Focus?

    Why does GM need a Malibu, Regal/Insignia, LaCrosse and Impala? While they’re all Epsilon 2 cars, do we need all four?

    Aside from the fact that GM’s creative accounting has already discussed in depth earlier, I still would have a queasy feeling about investing in GM if they can’t get their lineup together.

  • avatar
    Jeff S

    GM, Ford, and Fiat Chrysler are all too dependent on trucks. If truck sales took a large plunge they all would be in trouble. Fiat Chrysler is the most dependent on trucks and suvs. Even Ford would be in financial trouble without truck sales.

  • avatar
    laserwizard

    What is even sweeter is that Total Recall Motors was allowed by the Obama Administration to steal $14 billion in GM losses to be used to offset profits in the new company – which means the company will not be paying much if any taxes on the profits it makes – just like it never paid a dime in interest or taxes on the use of $49.5 billion that they had and the unrecovered $10 billion plus taxpayer funded interest carrying costs on the bailout that will only grow since everything was financed by deficit spending.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • gasser: I echo some of the comments above: “too heavy”, “too expensive”. I have had either personally, or in my...
  • Mike A: I will trust the MSRP analysis above than your anecdotal findings from one dealer. They sell less because...
  • RHD: Pretty soon there will be multi-charger adapters available on Amazon for 99.99, with free* two-day Prime...
  • RHD: The Chevy Bolt wins all three segments of “Buy/Drive/Burn”.
  • Corey Lewis: The dash design looks bad, and so does the door handle placement. Not too impressed here.

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber