General Motors Company reported its third quarter 2020 financial results today. The GM Q3 2020 earnings are headlined by a $4 billion income on $35.5 billion in revenue. Compared to the third quarter of 2019, these results represent a 74 percent jump in income on equal revenue.
GM says that the earnings were driven by its agility, and strong and growing franchises. And, despite the COVID-19 pandemic, the company continued to invest in its electric vehicle and autonomous vehicle projects, launched its all-new full-size SUVs from Chevrolet, GMC and Cadillac, while maintaining leading U.S. full-size pickup truck and large SUV market share.
GM Q3 2020 Earnings Summary
|METRIC||Q3 2020||Q3 2019||Q3 2020 - Q3 2019 ($)||% CHANGE Q3 2020 / Q3 2019 (%)|
|EPS DILUTED - ADJUSTED||$2.83||$1.72||$+1.11||+65%|
|AUTOMOTIVE OPERATING CASH FLOW||$9.9||$5.0||$+4.9||+139.5%|
|EARNINGS PER SHARE (EPS) DILUTED||$2.78||$1.60||$+1.18||+74%|
|NON GAAP METRICS|
|% EBIT-ADJUSTED MARGIN||14.9%||8.40%||6.5%||+77%|
|ADJUSTED AUTOMOTIVE FREE CASH FLOW||$9.1||$3.8||$+5.4||+139%|
“This year, and the third quarter, is a testament to GM’s resilience. We entered the pandemic in a strong position and acted decisively to keep our teams safe, conserve cash and preserve liquidity, all while keeping our critical product programs on track,” said GM CEO Mary Barra in a press release. “Now we are well positioned to meet rising customer demand, accelerate our transformation and deliver our vision of a world with zero crashes, zero emissions and zero congestion.”
GM says that its third-quarter results “prove the company can effectively manage the business through a global economy under severe stress,” which is “a result of its agility, and strong and growing franchises.” During the quarter, the Detroit-based automaker delivered strong earnings and free cash flow, while continuing to invest in EV and AV growth initiatives, launching an all-new portfolio of full-size SUVs and maintaining leading U.S. market share in full-size trucks and large SUVs.
GM Q3 2020 earnings broken out by business unit are as follows:
- GM North America: $4.4 billion EBIT-adjusted vs. $3.0 billion in the year-ago quarter. The results exclude the -$1.0 billion impact of the 2019 strike. EBIT-adjusted improved primarily due to continued cost actions and disciplined incentives. GMNA margins were 15 percent.
- GM International: break-even EBIT-adjusted vs. -$100 million in Q3 Q2 2019. Performance was due to strong pricing, improved mix and the benefits from cost actions.
- China equity income was flat as volume and mix offset unfavorable pricing and regulatory costs.
- GM Cruise: -$0.2 billion EBIT-adjusted vs. -$0.3 billion in the year-ago quarter.
- Cruise received a permit from the California DMV to remove human backup drivers from Cruise AV test vehicles in San Francisco. Before the end of the year, Cruise expects to deploy all-electric, driverless vehicles
- GM Financial: $1.2 billion EBT vs. $0.7 billion EBT in the year-ago quarter. EBT was positively impacted by high used vehicle prices contributing to gains on sale of off-lease vehicles, stable credit performance and lower interest expense.
“Sales in the U.S. and China are recovering faster than many people expected, and GM is benefiting from robust customer demand for our new vehicles and services, especially our full-size pickups and SUVs,” said GM interim CFO, John Stapleton. “These strong fundamentals and the positive impact of our transformation and austerity measures are helping us to deliver solid earnings, generate significant cash and quickly repay the debt we incurred during the early days of the pandemic.”
U.S. Market Update
GM states that U.S. sales improved sequentially each month within the third quarter, driven by strong sales of crossovers, full-size pickups and large SUVs. The Chevrolet Blazer posted its best quarter ever and Cadillac XT6 sales jumped 45 percent on an annual basis.
Despite tight inventory, GM’s large pickup trucks sold well, especially heavy duty models – the Silverado HD and Sierra HD. Through the third quarter, GM’s large pickups gained 1.7 percentage points in retail market share, leading the segment with 37.5 percent share, based on J.D. Power data.
Meanwhile, GM’s all-new full-size SUVs are in high demand: the 2021 Chevrolet Tahoe and Suburban, along with the GMC Yukon and Yukon XL gained three percentage points in retail segment share since launching in the second quarter, based on J.D. Power figures.
International Market Updates
On the new energy vehicles front, the Wuling Hong Guang MINI EV became the best-selling EV model in China, and Buick started sales of the Velite 7 all-electric SUV and Velite 6 plug-in hybrid electric vehicle in the third quarter. In the next five years, more than 40 percent of GM’s new models in China will be new energy vehicles.
In South America, GM sold nearly 123,000 vehicles in the quarter and the Chevrolet Onix was the best-selling vehicle in the region.
Liquidity & Cost Savings
GM ended the quarter with $37.8 billion in automotive liquidity, which is above target.
Additionally, GM repaid $5.2 billion of its revolving credit facilities during the third quarter, and also repaid an additional $3.9 billion in October. The company expects to repay the balance by year-end while maintaining a strong cash balance.
GM achieved its transformational cost savings target of $4.0 billion since 2018, including $200 million in the quarter. In a press release, GM says that it expects to continue making progress on the target range of $4.0 to $4.5 billion through the end of the year.
GM Financial contributed to the profitability of its parent company, while “providing exceptional support to customers and dealers during these challenging times.” Since its inception 10 years ago, GM Financial continues to grow its share of the financing business for both retail customers and dealers.
The captive finance arm had a GM U.S. retail penetration rate of 43 percent during the quarter and also became the number one floorplan provider for GM dealers. GM Financial has paid $800 million in dividends to GM year-to-date.