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]
If Cadillac is ever going to become the standard of the world it is will begin with becoming the standard of China.
I would find it Schadenfreudenly delicious if Cadillac and Buick ate each other alive at the hands of 20-something Chinese professionals.
for any Corvette buyers, if I recall correctly, there’s a 200+ day supply of output from the Bowling Green plant.
I believe the Corvette plant is DOWN due to tooling change/ plant construction.
High inventory on Corvette is therefore – intentional.
Rumor has it—–MID ENGINE!!!!!!!!
That’s right, folks, GM *paid* to get rid of Opel.
Standard GM European protocol. Not too terribly long ago, GM paid $2 billion to Fiat to sever the partnership they had fostered. The average Algerian trinket salesman has better business & negotiating skills than GM’s top brass.
Which only goes to show how desperate they were to be rid of it. Its been a money loser for many years, dumping it was a smart move.
And, buying into Fiat was not so smart. I believe that was the cash that enabled them to takeover Chrysler.
That cash just kept Fiat alive a while longer, long enough for our government (US and Canada) to hand over Chrysler to Fiat for nothing down and pennies on the dollar, and lent them the money to buy it. Our government can’t negotiate either.
I doubt most of the balance sheet changes are ‘cash’. Thats what they mean by ‘deferred tax assets and pension costs”
So is GM out of Europe entirely? Will they sell Chinese GMs there? Does this mean they lose the African market too? Does this mean I will never have my very own Kadett with which to hoon in the snow? Do I ask too many questions?
Out of Europe, Africa, India and soon Korea and Thailand as well.
Not Korea. The former Daewoo operation now badges them as Chevys, which is the design centre for its small cars
Guitar man,
I do know there are Chev dealers in France.
With all this interest in crossovers, stay tuned for the worlds most boring autoshow season.
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.