DETROIT — U.S. customers purchasing new General Motors vehicles in the last quarter paid an average of nearly $49,900, marking a significant contribution to the company’s 15% increase in net income year-over-year.
GM Chief Financial Officer Paul Jacobson indicated that price cuts are not expected, despite predictions from industry analysts regarding rising new-vehicle inventories and anticipated discounts.
Shares of General Motors experienced a 5% boost before Tuesday’s opening, achieving a new high for 2024.
The Detroit automaker reported a net income of $2.92 billion from April through June, with total revenue reaching $47.97 billion. Excluding one-time items, GM’s earnings per share came in at $3.06, surpassing Wall Street expectations by 35 cents, while overall revenue also exceeded forecasts.
Despite a slight decrease in average sales price compared to the previous year, GM sold 903,000 vehicles to dealers in North America during the quarter, an increase of 70,000 units from the same period in 2023. International sales, however, fell by 7,000 to 140,000 vehicles.
Earlier this year, GM had anticipated a 2% to 2.5% price drop; however, Jacobson noted that this has not occurred. Instead, a more modest decline of 1% to 1.5% is now expected in the latter half of the year.
Jacobson attributed the slight decrease in prices to a higher proportion of sales from lower-priced models like the Chevrolet Trax small SUV, which starts at $21,495. Notably, sales of premium pickup trucks and larger SUVs remained strong.
On a broader scale, U.S. buyers paid an average of $47,616 per vehicle in June, a 0.7% year-over-year decline, with discounts averaging $1,819—more than double from a year ago.
The U.S. new-vehicle inventory has risen to nearly 3 million units, up from approximately 1.8 million a year prior.
While competitors have increased discounts, GM has managed to maintain stable prices while gaining market share, according to Jacobson.
“Sales in July so far appear very similar to June,” Jacobson added. He emphasized that GM is focused on delivering products that resonate with consumers, allowing pricing to adjust naturally.
Sales performance influenced GM’s slight reduction in its net income guidance for the full year, now estimated between $10 billion and $11.4 billion, down from a prior range of $10.1 billion to $11.5 billion.
GM anticipates manufacturing and selling between 200,000 and 250,000 electric vehicles this year. However, only 22,000 have been sold in the U.S. during the first half, its largest market.
Jacobson acknowledged the challenge in meeting full-year targets but pointed out that the new Chevrolet Equinox small SUV has just arrived in showrooms and production is ramping up at battery plants in Tennessee and Ohio.
To enhance EV awareness, GM plans to increase its marketing budget by $400 million for the second half of the year. However, total annual marketing spending will remain lower than in 2023.
In the second quarter, GM allocated $500 million towards its autonomous vehicle unit, Cruise, which is $100 million less than the previous year. The company has decided to indefinitely postpone the development of the Origin, a six-passenger robotaxi that was slated for Cruise.
In its efforts to resume passenger service without human safety drivers, Cruise will utilize next-generation Chevrolet Bolt electric vehicles.
Following a significant incident last year that led to the suspension of its California autonomous passenger service, GM has reconsidered its previous revenues forecast of $1 billion annually by 2025 for Cruise, scaling back on extensive investments in the autonomous venture.
