Ditching Opel and Vauxhall Hits GM in the Pocketbook; Crossovers to the Rescue!

Steph Willems
by Steph Willems

Thanks mainly to the unloading of its longstanding European operations, General Motors reported a $3 billion net loss in the third quarter of 2017, according to an earnings report released Tuesday.

Punting responsibility of its Opel and Vauxhall subsidiaries to France’s PSA Group definitely didn’t come without a penalty, with most of the expense ($5.4 billion related to deferred tax assets and pension costs) incurred during the last quarter. Still, GM prefers the one-time earnings hit to keeping an unprofitable operation alive on the other side of the Atlantic.

While the Opel sale cut into the automaker’s balance sheet, The General also saw less earnings from car sales. Production declined in Q3 2017 compared to last year, and that meant less black ink. Still, GM doesn’t see many dark clouds. Why? One word: crossovers.

“Planned downtime in North American operations, including six weeks in fullsize truck plants, contributed to reduced wholesale volume of 268,000 units, or 26 percent compared to Q3 2016,” the automaker wrote in its earnings release.

Thanks to this, spurred by waning buyer interest compared to a record 2016, the company’s pre-tax income fell 42 percent to $2.1 billion in North America. Traditional car sales have fallen precipitously, with some plants preparing for extended shutdowns in order to reduce bloated inventories. It’s a sad time for full-size sedans in America.

However, it’s never been better if you’re a crossover, or a company flush with the hot-selling vehicles. As luck (and planning) would have it, GM is that company. Having just launched a redesigned Chevrolet Equinox and Traverse, as well as a GMC Terrain and Buick Enclave (and last year’s GMC Acadia), the company’s crossover sales are flying high.

Third-quarter sales of GM crossovers proved a high water mark for the bodystyle. Sales rose 25 percent over the same period in 2016.

Overseas, the automaker is enjoying rising sales amid a slew of new model introductions, helping offset earnings losses in North America. Chinese deliveries, totalling 982,311 vehicles, set a third-quarter record and represents a 12.3-percent sales increase. Sales of the Cadillac brand grew 42 percent. In South America, Q3 sales growth stands at 17.6 percent.

“With an aggressive vehicle launch cadence through the fourth quarter and an ongoing intense focus on costs, we project strong results through the end of the year,” said Chuck Stevens, GM vice president and chief financial officer, in a statement.

Part of GM’s streamlining efforts include reducing the amount of vehicles sold to fleets. It’s a less-profitable practice the company began curbing last year. For the second consecutive quarter, sales to rental fleets totalled less than 10 percent of the automaker’s volume.

[Image: General Motors]

Steph Willems
Steph Willems

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  • Conslaw Conslaw on Oct 24, 2017

    With all this interest in crossovers, stay tuned for the worlds most boring autoshow season.

  • Deanst Deanst on Oct 24, 2017

    While the Opel sale cut into the automaker’s balance sheet, The General also saw less earnings from car sales. Production declined in Q3 2017 compared to last year, and that meant less black ink. Still, GM doesn’t see many dark clouds. Why? One word: crossovers. If you're talking about earnings, the hit is seen on the income statement, not the balance sheet.

  • Lynchenstein @EBFlex - All ICEs are zero-emission until you start them up. Except my mom's old 95 Accord, that used to emit oil onto the ground quite a lot.
  • Charles The UAW makes me the opposite of patriotic
  • El scotto Wranglers are like good work boots, you can't make them any better. Rugged four wheel drive vehicles which ironically make great urban vehicles. Wagoneers were like handbags desired by affluent women. They've gone out of vogue. I can a Belgian company selling Jeep and Ram Trucks to a Chinese company.
  • El scotto So now would be a good time to buy an EV as a commuter car?
  • ToolGuy $1 billion / 333.3 million = $3 per U.S. person ¶ And what do I get for my 3 bucks -- cleaner air and lower fuel prices? I might be ok with this 🙂🙂
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