General Motors Reports Strong Q4 Earnings and Issues Profit Guidance for 2024
Record Revenue and Optimistic Outlook
General Motors (GM) has announced robust earnings for the fourth quarter, surpassing expectations on both revenue and profit. The company reported topline revenue of $42.98 billion, surpassing the consensus estimate of $39.53 billion. This figure, however, was slightly lower than the previous year’s Q4 revenue of $43.1 billion. Profitability remained solid, with adjusted earnings per share of $1.24, beating the estimated $1.16. The company reported adjusted EBIT of $1.757 billion, signaling a 53.8% decrease compared to a year ago.
GM’s upbeat earnings report comes as the company recovers from the effects of the UAW strike and adjusts its electric vehicle (EV) rollout. Despite the challenges, market confidence in GM has grown, with its stock surging over 9% in early trading, reaching its highest levels since July 2023.
2024 Profit Guidance
GM’s 2024 profit guidance matches its initial forecast for 2023, signaling a positive outlook for the company. GM expects adjusted EBIT in the range of $12 billion to $14 billion for the full year 2024. The company also anticipates adjusted earnings per share of $8.50 to $9.50.
Electric Vehicle Growth and Challenges
GM’s EV rollout has experienced some setbacks, leading to uncertainties. The pace of EV growth has slowed, attributing to the challenges the company has faced. GM reported $1.7 billion in reserves for losses relating to existing EV inventory in Q4. GM CEO, Mary Barra, expressed optimism, stating that GM expects to become “variable profit positive in the second half of the year” as EV demand and production growth continues.
The company’s CFO, Paul Jacobson, mentioned a continuous commitment to EV profitability, with a projected margin of profitability expected in 2025. GM now plans to sell at least 250,000 EVs in 2024, a downsizing from the previous goal of 400,000 units. The company did not provide an update on reaching its 1 million-unit EV capacity by 2025.
Strong Sales Performance and Growth Strategies
Despite the challenges posed by the UAW strike, GM’s Q4 vehicle sales were not significantly affected, with sales increasing by 0.3% compared to the same period the previous year. The company experienced an overall sales growth of 14.1% in 2023, reaching a total of 2.6 million vehicles sold. GM’s market share also witnessed a growth of 0.3% to a total of 16.3% in the US. The company remains a frontrunner in the full-size pickup sales and full-size SUV sales markets.
Looking ahead, GM is optimistic about the total US auto industry, predicting sales to reach 16 million vehicles in 2024, a significant improvement from the pandemic-impacted 13.4 million vehicles sold in 2022—the lowest experienced in a decade. However, GM is facing challenges in the Chinese market, with a projected loss in Q1.
Regaining Trust and Addressing Issues
GM has been focused on rebuilding trust and addressing challenges within the company. GM’s autonomous vehicle business unit, Cruise AV, temporarily halted all autonomous activities following an accident involving a Cruise robotaxi. The company has expressed its commitment to regaining trust and earning back the confidence of regulators and the public.
Analyzing the Success and Future Prospects
GM’s strong Q4 performance and the positive profit outlook for 2024 indicate its ability to overcome challenges and adapt to changing market dynamics. The company’s commitment to EV growth and profitability positions it for success in an evolving automotive industry. With an ambitious strategy focusing on EVs while maintaining flexibility, GM aims to leverage its production capabilities to lead the market.
