Saturday, April 29, 2017
By Kalea Hall
LORDSTOWN
General Motors reported net income of $2.6 billion on record revenue of $41.2 billion during the first quarter of 2017.
The income was up 33.5 percent year-over-year, and revenue was up 10.6 percent.
In North America, the Detroit automaker reported record adjusted earnings of $3.4 billion, up from $2.3 billion reported in the first quarter of 2016.
“It was an outstanding performance by GM in the first quarter,” said Michelle Krebs, senior analyst for AutoTrader. “They set a number of records. I think it speaks to the strength of their strategy to focus on profitability more than just shear volume.”
In the U.S., the automaker sold 689,521 vehicles during the first quarter. GM had its best first-quarter retail sales since 2008. Sales were driven by a 16 percent increase in crossover sales and a 3 percent increase in truck deliveries.
“It goes to show the hard work and effort of the UAW and GM is paying off,” said Robert Morales, United Auto Workers Local 1714 president. “It shows the GM base is strong.”
Glenn Johnson, president of UAW Local 1112, said the situation for the local autoworkers is bittersweet: They are happy to see the company doing well, but they wish the market for small cars would pick back up.
“We understand the profits show that the company is doing a fantastic job,” Johnson said. “The market has softened in small cars and has had a negative impact on our membership.”
During a conference call with investors Friday, the automaker said it will continue to adjust its passenger-car inventory levels to the lower demand.
Chevrolet cars, including the Lordstown-built Cruze, had 154,000 sales during the first quarter, which compares with 173,000 sold during the first quarter of 2016. Meanwhile, Chevrolet truck sales went from 196,000 to 203,000, and crossovers went from 103,000 to 115,000.
Locally, the Lordstown General Motors Assembly Complex has cut back its production of the Cruze, which led to the loss of the third shift in January and layoffs of more than 800. More layoffs are to come in July when the company plans to slow production of the Cruze but maintain two shifts. The number of layoffs to take place this summer has not be revealed.
“We still have work ahead of us to do,” Morales said. “We still have an obligation to perform and still be viable in the industry and be prepared for what’s to come.”
During its conference call, GM highlighted the launches of new sport utility vehicles: the Chevrolet Equinox, GMC Terrain and Buick Enclave.
“The strategic investments we have made in brands and in our operations are delivering outstanding new product with higher quality, stronger ATPs [average transaction prices] and third-party recognition, and they were produced with much greater efficiency,” GM CEO Mary Barra said during a conference call with investors Friday morning.
Krebs said the company will be “very well positioned” with the new product it has coming to a market that can’t get enough sport utility vehicles.
“Going froward they will be challenged by the fact that we do not expect sales volume to be as high as last year,” Krebs said. “We expect it to still be strong. It will take more effort in the way of incentives and promotions to sell that level of vehicles.”
Ford also reported an increase in its revenue but a drop in its net income. Ford’s revenue was $39.1 million, up 4 percent year-over-year. The company’s net income dropped 35 percent to $1.6 billion from last year’s $2.4 billion. The company attributed the lower profit year-over-year to higher cost, lower volume and unfavorable exchange; higher cost due to warranty, investments in new products and emerging opportunities for future growth; and rising commodity costs.
Fiat Chrysler Automobiles reported a 4 percent increase in revenue to $30.19 billion. The company’s profit was $698.7 million, up 34 percent from $521 million reported in the first quarter of 2016.