DETROIT (AP) — U.S. customers who bought a new General Motors vehicle last quarter paid an average of just under $49,900, a price that helped boost the company’s net income 15 percent from a year ago.
General Motors Chief Financial Officer Paul Jacobson said he doesn’t see his company cutting prices much, despite industry analysts’ expectations of growing new-vehicle inventories in the United States and deeper discounts.
The Detroit automaker earned $2.92 billion in the April-June period on revenue of $47.97 billion. Excluding one-time items, the company earned $3.06 per share, 35 cents above Wall Street estimates, according to data provider FactSet, and revenue was also better than expected.
While average sales prices were down slightly from a year ago, GM sold 903,000 vehicles to dealers in North America during the quarter, 70,000 more than in the same period in 2023. However, sales at its international unit fell by 7,000 to 140,000 vehicles, the company said.
However, GM shares began to fall shortly after the opening bell, as did shares of most other automakers, due to a number of potential risks perceived for the industry, including slowing sales in China.
GM is restructuring its operations in China, which has weighed on its overall performance. Second-quarter revenue at GM’s China joint venture was $4.7 billion, up from $4.1 billion in the first quarter but well below the $9.6 billion in unit sales the unit posted in the fourth quarter of 2023, and deliveries this year have been down.
GM is taking steps to reduce inventory in China, as well as looking at how to better align production with demand, Chief Executive Mary Barra said during a conference call Tuesday. She said the company expects the rest of the year to be tough and is working aggressively with its joint venture partner to fix that.
“Clearly, the steps we took, while important, were not enough. We had expected to return to profitability in China in the second quarter. However, we reported a loss, and we expect the rest of the year to remain challenging as headwinds are not easy,” he said. “We are working closely with our joint venture partner to restructure the business to make it profitable and sustainable.”
GM shares, which had risen sharply before the opening bell, were down nearly 7% by midday.
Edward Jones analyst Jeff Windo said the company’s latest quarter may have heightened existing concerns about the auto industry.
“Slowing sales in China and increased competition from domestic rivals could act as a headwind to earnings,” Windo said in an email. “EV development is also believed to help support future growth. So a slowdown in production could push sales growth targets even further.”
Jacobson, GM’s chief financial officer, said that early in the year GM expected prices to fall 2% to 2.5% this year, but that hasn’t happened yet. Instead, the company now expects a 1% to 1.5% decline in the second half.
GM’s prices fell slightly, Jacobson said, because the bulk of its sales came from lower-priced vehicles like the Chevrolet Trax small SUV, which starts at $21,495 including shipping. The company saw strong sales of higher-priced pickup trucks and larger SUVs, he said.
While other companies have raised cuts, GM has been able to hold relatively steady while gaining U.S. market share, Jacobson said.
Sales and pricing were among the reasons GM cut its full-year net income guidance only slightly, from a range of $10.1 billion to $11.5 billion, to a new range of $10 billion to $11.4 billion.
GM also said it expects to build and sell 200,000 to 250,000 electric vehicles this year, but in the first half it sold just 22,000 in the United States, its biggest market.
The company will add $400 million to its first-half marketing spending from July to December, in part due to increased awareness of its electric vehicles, Jacobson said. Annual marketing spending will remain lower than it was in 2023, he added.
GM spent $500 million in the second quarter on its problems Self-Driving Vehicle Unit$100 million less than last year. The company said it would indefinitely postpone construction of Origin, a six-passenger robotic taxi that was planned for Cruise.
The self-driving vehicle unit will rely on the next-generation Chevrolet Bolt electric car as it attempts to resume passenger transportation without human drivers for safety.
Cruise lost its license to autonomously transport passengers in California last year after one of its robot taxis pulled a pedestrian — who had just been hit by a human-driven car — across a dark San Francisco street before stopping.
GM had hoped the Cruise would generate $1 billion in annual revenue by 2025. But it has been reduced. Huge investment in service.
“GM’s shift to a new platform and the regulatory concerns it cites raise questions about the timeline for deployment and potential consumer interest,” said Edward Jones’ Windau. “We believe that regulatory issues are problematic for autonomous driving and could cause these types of vehicles to be released to the market longer than expected.”
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Associated Press business writer Michelle Chapman contributed to this report.
