Can GM replicate their 2016 results?

Last week we mentioned that GM had sold over 10M vehicles, based on huge sales in China.   However, big inventories, huge incentives, and a flat domestic market are leading experts to wonder whethet GM can replicate 2016 results.

In order to address concerns, GM is planning to introduce new versions of its top selling SUVs, GMC Terrain and Chevrolet Equinox and Traverse sport utility vehicles to help maintain or exceed the $12.5 billion in adjusted earnings before interest and taxes reported Tuesday. Those introductions may be needed to shore up its shrinking North American profit margin, as cars like the Chevrolet Cruze crowd dealer lots. Investors have their doubts, sending the shares down the most in more than a year.  According to Bloonberg, GM Chief Executive Officer Mary Barra has laid off or dismissed workers making slow-sellers including the Cruze and Camaro sports car to begin the year. The cutbacks contrast with the pressure President Donald Trump has put on automakers to build new US plants. GM instead is trying to address inventory that would take about 108 days to work through at January’s selling rate -- more than a month’s worth of extra supply compared with this time last year.

GM has built inventory in part to prepare for introductions of new models including the Terrain, Equinox and Traverse SUVs, Stevens told reporters in Detroit, where the company is based. New vehicle makeovers often require down time at plants and slower early production to ensure quality of the initial vehicles coming off the assembly line. “We will go from the oldest crossover SUV line to the youngest,” he said.

• In the fourth quarter, GM’s adjusted earnings before interest and taxes fell $153 million to $2.6 billion in North America.
• Revenue in the fourth quarter climbed almost 11 percent to $43.9 billion, topping the average projection for $41.2 billion.
• Adjusted earnings rose to $1.28 per share, exceeding the $1.17 average prediction by 21 analysts.
• Losses in Europe narrowed to $246 million in the quarter, a $52 million improvement from a year earlier.
• GM’s income in China during the last three months of the year declined 8.2 percent from a year ago to $525 million.