- US car giant had to close plants between March and May
- Company says sales picking up and signs are encouraging
The Flint plant in Michigan, which produces Chevrolet and GMC Sierra trucks. The company made $2.38bn in the same quarter a year ago.
Photograph: Jeff Kowalsky/AFP via Getty Images
General Motors lost $806m in the three months between April and June even though the car company was able to reopen its US factories for the last half of the second quarter.
The Detroit automaker had to close its plants between 18 March and 18 May because of the coronavirus, and production did not resume fast enough to stem the losses. The company made $2.38bn in the same quarter a year ago.
Like other automakers, GM counts revenue when vehicles are shipped from factories, so it had little money coming in for about seven weeks in April and May.
Revenue was cut in half to $16.78bn but was better than analysts’ estimates.
GM burned through more than $9bn during the quarter, including nearly $8bn from operations and $1.1bn in capital spending. It lost money before taxes in all of its business units but its financial arm. In normally profitable North America, GM lost $100m.
The chief financial officer, Dhivya Suryadevara, said that if annual US sales continue at a rate of 14m and production is not disrupted, GM should generate $7bn to $9bn in cash during the second half of the year, offsetting a large part of the first-half cash burn.
Sales in the US, GM’s most lucrative market, fell 34% for the quarter, even though executives said there is pent-up demand for vehicles, especially pickup trucks. GM has put many of its truck plants on three shifts as it tries to make up for lost production.
Suryadevara said the company nearly reached break-even pre-tax earnings in North America in a challenging quarter.
GM said sales are showing signs of improvement, and in some areas, such as pickup trucks, have been constrained by low inventory levels as plants came back on line.
The company is working all avenues to increase US dealer stocks and has restarted all US truck and full-size SUV plants to three shifts, and nearly all other plants to pre-pandemic shift levels, GM said.
US sales tumbled 35% in April, but that improved to a decline of around 20% year over year in May and June, the company said.
The company reported strong sales of pickup trucks and new full-size SUVs such as the Chevrolet Tahoe and GMC Yukon. “They’re flying off the dealer lots,” Suryadevara said.
The whole auto industry was expected to struggle this quarter as the pandemic cut into sales. Electric vehicle company Tesla may wind up the lone exception because it managed to post a $104m profit. But Japan’s struggling Nissan reported a $2.7bn loss (285.6bn yen) for the period.