GM Looks Towards Positive Outlook for 2024 via ‘Resilient’ US Economy

posted by  
Filed under Automotive, GM, News

General Motors (GM) has reported a dip in pre-tax profit for the fourth quarter, but despite this, the company remains optimistic about its prospects for 2024, buoyed by what it describes as a ‘resilient’ U.S. economy. Mary Barra, the CEO of GM, expressed confidence in the U.S. economic landscape, predicting continued strength in the job market and auto sales.

This positive outlook has resonated with investors, as evidenced by a significant uptick in GM shares, which surged over 7.0% in pre-market trading ahead of an anticipated conference call with analysts. This contrasts with Tesla’s recent cautionary statements, where CEO Elon Musk warned of slow growth for the electric vehicle giant, leading to a substantial sell-off.

GM’s strategy for the year ahead revolves around capitalizing on robust demand for its combustion trucks and SUVs in North America, alongside a focus on cost-cutting initiatives and ramping up sales of its new generation of electric vehicles. Despite falling short of earlier delivery targets in 2023, GM remains bullish on the electric vehicle market, expecting overall EV sales to climb to 10% of the U.S. market this year, up from 7% in the previous year.

Paul Jacobson, GM’s Chief Financial Officer, outlined expectations that the company’s electric vehicle operations will start yielding variable profits by the second half of the year. Additionally, GM plans to continue returning excess cash flow to shareholders, building on the $12 billion returned in 2023 through share buybacks and dividend increases.

Looking ahead, GM forecasts adjusted pre-tax profits in the range of $12 billion to $14 billion for 2024, with capital spending expected to remain relatively stable compared to the previous year. The company anticipates earnings per share between $8.50 and $9.50, factoring in the impact of share buybacks and other financial considerations.

However, GM faces challenges on multiple fronts, including ongoing issues with its Cruise robo-taxi unit, which incurred significant losses in 2023. Following a critical incident involving one of its self-driving cars, GM announced plans to slash spending at Cruise by $1 billion and to implement recommended changes following an external review.

Moreover, GM is grappling with challenges in the Chinese market, once a stronghold for the company, where domestic competitors and Tesla are gaining ground with electrified vehicles and competitive pricing strategies. Chief Financial Officer Paul Jacobson acknowledged the likelihood of posting a loss in the current quarter in China, citing inventory challenges.

Despite these hurdles, GM remains optimistic about its trajectory, banking on the resilience of the U.S. economy and its strategic initiatives to navigate through challenges and capitalize on opportunities in the automotive market.

Source: Reuters


You May Also Like


Automotive Manufacturers & Categories