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% |
| GAAP METRICS | ||||
| NET REVENUE | $35.5 | $35.5 | $0.00 | 0% |
| INCOME | $4.00 | $2.3 | $+1.70 | +74% |
| 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% |
| EBIT-ADJUSTED | $5.3 | $3.00 | $+2.30 | +78% |
| 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.
Segment Results
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.”
Cadillac XT6
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.
Chevrolet Blazer
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.
2021 Chevrolet Suburban and Tahoe
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.
2021 GMC Yukon Denali
International Market Updates
Q3 2020 GM China sales grew 12 percent year-over-year as the market continued its recovery. Buick and Cadillac posted strong sales, with sales increasing 26 percent and 28 percent, respectively.
Wuling Hong Guang MINI EV
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.
Buick Velite 6 PHEV (left) and 2021 Buick Velite 7 EV (right)
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
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.
We will continue our obsessive coverage of all things General Motors, and invite you to subscribe to GM Authority for more GM financial news, GM business news, and around-the-clock GM news coverage.
Comments
The Barra haters are awfully quiet right now.
Waiting for a comment along the lines of: “A male CEO woulda brought in moar moneees and brought back Pontiac, Oldsmobile, Saturn, and pulled all business outta China!!!”
Saturn is soooooo valuable and who needs Chinese money? Idiots!!! Only GM mistake was Opel, not making similar moves to those of PSA, not using Opel to move Buick Blue EVs, not utilizing only EU factories.
Aside from this GM is as healthy as VW or Toyota. The Honda deal will only make the Company stronger
she is only responsible for the bad stuff.
She has been great for shareholders… not so much for enthusiasts.
35.5 Billion and they couldn’t afford to have Allison Transmission build the 8 speed transmission for the Colorado/Canyon??? smh
You bet! because they are busy learning Chinese to communicate with the real future leaders of GM.
Tim
Chinese lesson of the day: Dump Lings, Egg Roll, Stir Fry, Toyotasuk.
@Tim:
I often wonder if there are forums/sites like this one in Germany or Japan.
If so, are they populated by Bitter-Bettys like you complaining that their home grown Automakers pay so much attention to the American market? Do they rant about sales being higher elsewhere than their home market? Are they as sarcastic about management speaking English, or any other language?
Or, are they proud and supportive of their National Industries having great success outside their borders?
I wonder.
@Megeebee You are spot on.
For some, GM is damned if it does and damned if it doesn’t.
Thank you.
Well GM did spend 12 billion in China. Soooo anyway.
They spent money in China to earn profits. Much of those Chinese vehicle programs will end up here built in N American factories.
I wonder if Germans get angry when BMW spends money in China or VW in America?
If GM followed your logic and starved China they would be weak and a take over target like Ford.
Ignorance is rampant everywhere. They have theirs too.
Complaining about everything is American. A lot of other countries train their people to shut up and follow orders. Particularly Germany and Japan, which has led to some problems with this in the past. It’s also correlated with the fact that their workers will insert part A into hole B all day without complaint.
Often in many socialist places you are removed from society if you complain. In many cases never seen again.
Sam
Low birth rates in Germany & Japan indicates people are having problems inserting part A into hole B.
My sentiments exactly. I also don’t know a single German who complains about one or two bmw/audi/mb models being made outside Germany. Moreover if his German Jewel breaks in the middle of the road he never buys a japanese car.
Clears throat “Murray Burry is da wostest wamen in da world “………
Nicely detailed article.
The cost cutting and increasing of ROI at GM has gotten them through the tough times and now expanded profits in better times.
With the way the markets are and economy under the Virus GM is in a solid position.
The old ways of being all you can be and offering something for everyone is over. Making money in the auto segment is tough and only will get tougher.
As time goes in and EV models become cheaper to build this will really add to what GM has started.
While GM says the EV move is to save the planet the truth is it is to make cars that are cheaper, faster and more profitable to develop and make more money.
Like Apples claim to remove Chargers to have smaller boxes to save the environment. The truth is they are saving money and holding product cost down.
Don’t hate Mary, but as a long time shareholder I can’t help but notice that the occasional GREAT quarter doesn’t make up for the fact that the company is worth ~$15bn less now than when she became CEO, all while the average publicly listed US company (as per the S&P 500 and Dow Jones) has increased significantly in value. The auto business isn’t easy, but under her watch they have made some great as well as somr truly awful decisions, and the net result after a nearly 7 year tenure is net negative market cap change.
Ford and FCA are too less valuable then a few years ago, also this imaginary high on increasing share in a major recession and a pandemic sounds like a Wall St. dream, like the free money Wall St is getting from the Fed sounds like they can’t balance their books also.
Wall Street seeks unable to properly assess automaker value with Tesla and Nicola (sp?) overvalued and treated like Silicon Valley firms. GM is more of a technology company than many tech firms.
@C8.R
Well written. It’s true. While electrification will indeed be far less brutal to our eco-system on the whole, they also represent a “Holy Grail” the Industry has been praying for for years.
The initial investments, as we can see, are HUGE. But once in place, and standards put in place, the automakers that are left will be far more profitable. Building an EV is so much simpler and less expensive.
However, the EVs will all but eliminate or drastically reduce the size of old sub-industries.
No more radiators or hoses.
No more drive lines.
No more exhaust pipes/mufflers/catalytic converters
No more oil or oil changes
Do EVs have transmissions?
These are just a few that come to mind off-the-bat.
There will be new industries, mostly I think to do with charging and charging stations. For example, as more people buy EV’s, They will need to charge them. Not everyone has an enclosed garage to plug in a charger. Condominium and Apartment complexes will need to offer charging equipment to compete for buyers/tenants.
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