General Motors has announced that it expects its profit margins to increase in 2014 compared to 2013. The automaker’s improved outlook is based on a forecast of modest global industry growth driven by the United States, China, and Europe as well as the introduction of key vehicles globally.
Specifically, GM expects a most improvement in earnings before interest and taxes (EBIT) adjusted, with the improved underlying operating performance expected to more than offset increased the restructuring expense. Additionally, the automaker expects EBIT-adjusted margins to remain similar to those in 2013.
Newly-appointed GM President Dan Ammann shared the outlook with investor analysts attending the Deutsche Bank 2014 Global Auto Industry Conference in Detroit.
Meanwhile, (also recently-appointed) GM CEO Mary Barra stated the following in a news release: “We continue to perform well in the two most important markets in the world, the U.S. and China. We’re taking advantage of our strength in these countries to restructure and make the investments necessary to grow profitably in other parts of the world.”
General Motors launched 18 vehicles in the United States in 2013, and plans to introduce 15 new or upgraded models in its most profitable market in 2014. Vehicles to be introduced in key markets globally in 2014 include 2015 Chevrolet Silverado HD, 2015 Chevrolet Tahoe, 2015 Chevrolet Suburban, 2015 Chevy Colorado, Aveo and Sail; 2015 Cadillac ATS Coupe, 2014 Cadillac CTS, and 2015 Cadillac Escalade; 2015 GMC Sierra HD, 2015 GMC Yukon XL, 2015 GMC Yukon Denali XL, and the 2015 GMC Canyon.
The General will also commence production in four additional plants in China through 2015, enabling production of up to 5 million units annually.
In listing key accomplishments for 2013, Ammann noted the following:
- Executed successful global vehicle launches
- Received most initial quality awards among automakers in 2013 J.D. Power and Associates Initial Quality Study
- Improved revenue, EBIT-adjusted and margins
- Announced GM International Operations restructuring including plans to discontinue Chevrolet’s mainstream presence in Western and Eastern Europe and transition to a national sales company in Australia with its Holden brand
- Completed the acquisition of substantially all of Ally Financial’s international operations
- Added to the S&P 500 index
- Refinanced $4.5 billion in high-cost obligations, increasing financial flexibility
- Achieved investment grade rating with Moody’s Investors Service
- Monetized non-core assets including Ally and PSA ownership stakes
- The U.S. Treasury divested its ownership stake
- Announced senior leadership succession plan
“In 2014, our focus will remain on winning customers by delivering new vehicles with compelling value and outstanding quality,” Ammann said. “Our ongoing work to transform our company into a formidable competitor in every market we serve will continue unabated.”
The GM Authority Take
That last quote oozes confidence and determination, and confirms what some of our sources have told is in the past.
Additionally, what The General didn’t mention during the Deutsche Bank conference is that one of those four new plants coming online in China this year will produce Cadillacs for the country —- a development that will make the slow-selling luxury vehicles more accessible to the Chinese market thanks to the removal of the high import tariff currently imposed on most of the brand’s models. And a successful Cadillac in China opens many doors for the brand to be successful elsewhere in the world.
All that is to say that Cadillac’s success in China and then globally will be of particular importance in improving The General’s profit even further.