General Motors’ shares soar as strong truck sales, higher prices boost third-quarter profit

General Motors posts strong beats on top and bottom lines
8:37 AM ET Wed, 31 Oct 2018 | 01:42

General Motors said Wednesday it sold fewer vehicles during the third quarter — but at higher prices — helping the Detroit automaker deliver a better-than-expected earnings report that sent its shares soaring.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $1.87, adjusted, vs. $1.25 expected

Revenue: $35.79 billion vs. $34.85 billion expected

The carmaker's shares jumped by 6.3 percent in morning trading. During the premarket, it had gained 10 percent.

GM swung to a profit during the quarter from last year's loss, which stemmed from the company's sale of its European business to Groupe PSA. GM's net income was $2.5 billion, or $1.75 a share, compared with a loss of $2.98 billion, or $2.03 a share, a year ago. It generated $35.79 billion in revenue, up 6 percent from $33.62 billion during the same quarter last year. Analysts had expected the company to generate $34.85 billion during the third quarter.

“Our disciplined approach to the U.S. market, combined with strength in China and further growth of GM Financial, drove a very strong quarter,” said GM CFO Dhivya Suryadevara. “We will continue to take actions to mitigate headwinds including foreign currency volatility and commodity costs.”

Here's what's driving the growth in GM's North America sales: Analyst
2:54 PM ET Wed, 31 Oct 2018 | 03:37

Suryadevara said on a conference call that GM expects fourth quarter performance to be strong, with solid sales of highly profitable crew-cab trucks.

The company said it sold fewer cars but was able to raise its prices in the U.S. by an average of about $800 per vehicle to more than $36,000, setting a record for transaction prices and about $4,000 over the industry average. It also said Cadillac sales in China broke a record, up 4 percent over the previous year and 20 percent year to date.

GM's third-quarter vehicle sales volume dropped by 14.7 percent from the previous year, the company said. Sales fell across every region and every brand, with Cadillac seeing the smallest decline in sales among its marquee brands, 3.9 percent, from the previous year.

Sales of several Chevrolet and GMC truck models, including the Silverado LTZ and High Country and the GMC Sierra SLT, Denali and its new off-road AT4 crewcab models exceeded expectations, GM said. The automaker expects to ship about 120,000 of the new trucks in the second half of 2018.

The strength of GM's truck and SUV business in North America is further evidence of how important that market is to all three major U.S. automakers, who have been less successful abroad.

“North America is the best place to do business,” said CFRA analyst Garrett Nelson. “Looking at international operations, it is just a matter of who can tread water the best.”

Major automakers have been reporting higher material costs and other increased expenses stemming from the trade war, particularly between the United States and China.

That's been punctuated by signs of weak demand for new cars overall, particularly in North America. A recent estimate from industry tracker LMC Automotive said North American new vehicle sales are expected to fall in October from last year and face further pressure.

“Affordability may be the canary in the coal mine for the level of auto sales as we close out 2018 and begin to look at 2019. Transaction prices are still edging higher,” said Jeff Schuster, president, Americas operations and global vehicle forecasts at LMC Automotive.

The Federal Reserve is expected to raise interest rates again in December, followed by three more rate hikes in 2019, he said. Drivers are buying more used cars, in the meantime.

“This is a combination that could cause consumers to be squeezed out of the new-vehicle market, putting pressure on volume even if other fundamentals are favorable,” Schuster said.

GM's shares have fallen nearly 19 percent since the beginning of the year.

Elon Musk says Tesla ‘probably would not’ take money from Saudi Arabia now

Elon Musk says he probably wouldn't take Saudi money
8:23 AM ET Fri, 2 Nov 2018 | 00:53

Tesla “probably would not” take money from Saudi Arabia in the wake of the death of Saudi journalist Jamal Khashoggi, Chief Executive Elon Musk said.

Musk and his electric car manufacturer hit headlines in August after the billionaire put out a tweet sayingthat he was considering taking the firm private at $420 per share.

Later explaining his tweet in a blog post, Tesla's boss said he had been approached by Saudi Arabia's sovereign wealth fund “multiple times” about the prospect of taking Tesla private, and that it has bought a nearly 5 percent stake in Tesla through the public market. Plans for a take-private deal were subsequently shelved.

In an interview with Recode's Kara Swisher, which was published early Friday morning, Musk was asked directly about his thoughts on the death of Khashoggi, an outspoken critic of the Saudi regime.

“Yeah, I mean, that sounds pretty bad. So … that is not good. That is bad,” he said.

Asked whether he would accept Saudi money now, following Khashoggi's death, Musk said: “I think we probably would not.”

Saudi Arabia's public prosecutor last week acknowledged for the first time that Khashoggi's killing at the Saudi consulate in Istanbul, Turkey was “premeditated,” deviating from previous claims that his death was unintended.

The Arab kingdom initially denied any involvement in his disappearance, saying the Washington Post journalist had left the consulate unharmed. Saudi Crown Prince Mohammed bin Salman has said he is cooperating with Turkey over Khashoggi's killing, and that those found guilty will be brought to justice.

Musk, asked about the influence of the Saudi sovereign wealth fund in Silicon Valley, added that it was important to recognize that not all Saudi cash is the same.

He said: “I think we should just consider that there is a whole country, and there's, you know … There are a lot of good people in Saudi Arabia, and Saudis who are outside of Saudi Arabia. So I think you cannot paint an entire country with one brush.”

Saudi Arabia's Public Investment Fund (PIF) is a major backer of SoftBank's $100 billion Vision Fund, which has been ploughing cash into Silicon Valley's start-up economy. The PIF has already committed $45 billion to the fund, and Saudi Arabia's crown prince said last month the PIF plans to invest another $45 billion into the Japanese firm's second major fund.

The relationship between SoftBank and Saudi Arabia appears to have become increasingly uncertain, however, following the controversy surrounding Khashoggi. Masayoshi Son, the firm's chief executive, reportedly backed out of the country's high-profile Future Investment Initiative business conference last month.

Various other tech executives withdrew from the investment conference, including Uber's Dara Khosrowshahi, Google's Diane Greene and Simon Segars of Arm Holdings — which is fully owned by SoftBank.

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Plant opens for electric air conditioning compressors: MAHLE strengthens its systems competence in electric vehicles

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Plant opens for electric air conditioning compressors: MAHLE strengthens its systems competence in electric vehiclesStuttgart, October 31, 2018 – MAHLE has opened its first production plant for electric compressors. MAHLE will manufacture e-compressors for international automobile manufacturers at the production location in Balassagyarmat/Hungary and has already obtained several customer projects. Series production will start in 2019.
Presse releaseDownload [PDF; 43 KB] First MAHLE production line for e-compressorsElectric compressors remove the link between air conditioning systems and combustion enginesSeveral customer projects have already been wonCompressors are the heart of air conditioning systems—and the e-compressor will remove the link between air conditioning systems and combustion engines. Its role in the air conditioning of electric vehicles is therefore critical. “Electric compressors are of major strategic importance to MAHLE, because they enable us to build on our position as a complete systems provider in the field of air conditioning for electric vehicles too,” explains Dr. Jörg Stratmann, Chairman of the Management Board and CEO of the MAHLE Group. MAHLE also develops and produces the necessary electric drives as well as electronics and software.
The plant in Balassagyarmat will be particularly important when it comes to production rollout. “This location will help to further strengthen our existing market position,” adds Bernd Eckl, Member of the Management Board of the MAHLE Group and responsible for the Thermal Management business unit. At the same time, the opening of the production plant is a green light for the additional e-compressor production locations that will follow.
With the consistent implementation of its dual strategy—the further optimization of the internal combustion engine on the one hand and the simultaneous development of solutions for the widespread adoption of e-mobility on the other—MAHLE is instrumental in shaping the future of mobility as a key player in the automotive industry.
About MAHLEMAHLE is a leading international development partner and supplier to the automotive industry as well as a pioneer for the mobility of the future. The MAHLE Group is committed to making transportation more efficient, more environmentally friendly, and more comfortable by continuously optimizing the combustion engine, driving forward the use of alternative fuels, and laying the foundation for the worldwide introduction of e-mobility. The group’s product portfolio addresses all the crucial issues relating to the powertrain and air conditioning technology—both for drives with combustion engines and for e-mobility. MAHLE products are fitted in at least every second vehicle worldwide. Components and systems from MAHLE are also used off the road—in stationary applications, for mobile machinery, rail transport, as well as marine applications.
In 2017, the group generated sales of approximately EUR 12.8 billion with about 78,000 employees and is represented in more than 30 countries with 170 production locations. At 16 major research and development centers in Germany, Great Britain, Luxembourg, Spain, Slovenia, the USA, Brazil, Japan, China, and India, around 6,100 development engineers and technicians are working on innovative solutions for the mobility of the future.
For further information, contact:MAHLE GmbH
Margarete Dinger
Corporate Communications/Public Relations
Pragstraße 26–46
70376 Stuttgart/Germany
Phone: +49 711 501-12369
margarete.dinger@mahle.com

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