GM’s 2Q2021 Results Beat EstimatesBy Alejandro Enríquez | Tue, 08/10/2021 - 17:59
Last week, US giant GM reported sold financial results during 2Q2021, highlighting that its strategies for electric and autonomous vehicles are moving faster even as the company focused in producing its highest-demanded vehicles during the pandemic.
The company beat the earnings per share (EPS) estimate for the fifth quarter in a row, reaching a US$1.97 EPS. "There will be challenges, but we now expect full-year EBIT-adjusted in the range of US$11.5 billion to US$13.5 billion, compared with US$10 billion to US$11 billion previously," writes Mary Barra, CEO of GM, in a letter to shareholders.
Net sales and revenue during 2Q2021 doubled that of 2Q2020, as vehicle sales in Mexico in Canada during the quarter increased by 40 percent. Sales in the North American region, which comprises the US, Canada and Mexico, represented 82.6 percent of the company's total sales during 1H2021, almost 3 percentage points more than in 1H2020.
GM is also Mexico's top vehicle producer and exporter, and its second top seller with a 14.60 percent market share in sales during 1H2021, for a total of 73,235 units sold. The brand is also second in one of the largest segments for the Mexican market: SUVs, with 10.32 percent share. GM sales results have fluctuated over the years but the company has remained close to the 16 percent of the total market share.
Days after presenting its quarterly results, the company announced that its Chevrolet Beat and Chevrolet Spark models, which are some of its best-selling, will cease to be sold and produced in Mexico. Beat was produced in India at a facility that GM recently sold. Spark, produced in Mexico, met the end of the production line opening space for Aveo, Onix and Cavalier.
In GM’s fillings to SEC, GM admits: "while not all vehicles within a segment are individually profitable on a fully allocated cost basis, those vehicles attract customers to dealer showrooms and help maintain sales volumes for other, more profitable vehicles and contribute towards meeting required fuel efficiency standards. As a result of these and other factors, we do not manage our business on an individual brand or vehicle basis.”
GM’s 2Q2021 results also point to its firm commitments toward electric and autonomous vehicles. “Our vision for the future is a world with zero crashes, zero emissions and zero congestion, which guides our growth-focused investment in electric and autonomous vehicles, and new products and services,” reads the filings.
Barra herself explained that some of the key projects for the company include expanding battery cell manufacturing in the US, which will add up to a total of four plants when finished. Also, GM is developing the third generation of GM's HYDROTEC fuel cell technology which "are poised to become the leading technology for electrifying the largest, hardest-working vehicles on the road and beyond." In June 2021, the company announced plans to increase its investment in electric and autonomous vehicles from US$27 billion to US$35 billion by 2025 to accelerate battery and electric vehicle assembly capacity.
Cruise Holdings or Cruise, GM’s autonomous vehicle subsidiary, reportedly is “actively testing autonomous vehicles in the US. Gated by safety and regulation, Cruise continues to make significant progress towards commercialization of a network of on-demand autonomous vehicles in the US and globally.” The subsidiary reported US$25 million in revenue during the quarter.
GM’s does not disregard the risks of semiconductor supply shortage either. “The supply shortage has impacted, and continues to impact, multiple suppliers that incorporate semiconductors into the parts they supply to us. We expect the semiconductor supply shortage will continue to have an impact on our business for the foreseeable future. We will continue prioritizing our most popular and in-demand vehicles, including our full-size trucks, full-size SUVs, and electric vehicles. We do not expect this shortage to impact our growth and electric vehicle initiatives,” stated the company in its SEC fillings.