General Motors on Wednesday outlined strategies for a May 18 restart of most of its North American plants closed due to the coronavirus pandemic as it reported a stronger than expected quarterly profit, increasing its shares by 5.3%.
The automaker had earlier suspended its 2020 profit outlook due to uncertainty over the outbreak and did not give an update on Wednesday.
“With the level of uncertainty out there, it’s too soon to tell until the economy starts to open up,” Chief Financial Officer Dhivya Suryadevara informed reporters.
But Suryadevara added the second quarter is going to be the hardest hit with North American production closing for much of the period. She said the coronavirus pandemic had decreased the automaker’s first-quarter profit by $1.4 billion, with about half of that in the continent.
The Detroit automaker has cut costs and made other moves during the COVID-19 outbreak, including delaying of its dividend and share buybacks, shutting its Maven car-sharing unit, delaying work on some product programs, decreasing marketing budgets and cutting white-collar workers’ salaries. It also added $16 billion to its cash position by drawing down credit lines.
The automaker ended the first quarter with $33.4 billion in automotive cash, including about $16 billion drawdown from its revolving credit facilities.
The market in China may bring some hope where the pandemic started back in November but GM has resumed production there now. While first-quarter sales there dropped 43%, they rebounded to increase by double digits in April. That offers hope for the U.S. market, where sales dropped 7% in the first quarter.
“We’re certainly seeing green shoots in China,” CFO Suryadevara stated. “Production has completely restarted and the dealers are seeing increased traffic. Sales are increasing.” GM said it is aiming to boost its China market share this year.
In the U.S. market, pickup trucks may bring some hope.
GM CFO Suryadevara said that before the month of March the truck segment accounted for 13%-14% of total vehicle sales, which increased to 18% in March and an estimated 21% in April.
“Obviously, truck is our strong suit,” Suryadevara said. “That’s something we’re going to capitalize on as we restart.” She added that pricing on trucks continue to be strong.
U.S. automotive production ground was stopped March as the number of COVID-19 infections and deaths increased. So far coronavirus has infected more than 1,259,708 people in the US and killed 74,581.
