Much has been written about the alleged upcoming downturn in the automotive industry and General Motors made it clear it was preparing for change when it began restructuring in late 2018.
Now the automaker’s chief financial officer, Dhivya Suryadevara, has provided more insight on how the automaker is preparing for any shifts in the automotive sector in an interview with Reuters.
Suryadevara told the news agency that GM currently has $18 billion in cash stockpiled away, giving it enough to pay two years worth of dividends. She also said the automaker has also simulated both moderate and severe downturn scenarios, like what happened in 2008-2009, in order to gauge how such an economic downturn may effect the company today.
“It’s something that we continually keep watching and updating to make sure that we’re all set for when the downturn does come,” Suryadevara explained.
It’s not time to panic, though. Reuters reports GM does not anticipate an imminent downturn, with immediate fluctuations in the industry not necessarily reflecting its long-term health.
GM would shift to selling lower-priced vehicles should a 2008-2009-esque scenario should arise, Suryadevara explained, and would also defer costs related to non-essential capital expenditures.
Reuters’ report indicates that GM’s crosstown rival Ford has around the same amount of cash on hand at $20 billion and is also monitoring the economic situation closely. Ford is working with economists to determine the best long-term strategy, as well.
Last year GM closed four US plants and one Canadian plant as it looked to cut back on spending and invest money into the healthiest and most profitable parts of its business – that being crossovers, SUVs and pickup trucks. The automaker is now beginning to adjust output of even popular models like the Chevrolet Equinox, however, which could be a sign that vehicle production is trending downward.
The ongoing trade war between the US and China also stands to threaten automakers’ business as they grapple with increased material costs.