and joining us now to discuss is Al Root senior writer
at Barron's Al thanks so much for joining us this morning.
Let's talk about these earnings, What's your biggest takeaway so far?
Having looked at them?
Uh, there's a few things.
The inventory situation in the US is a little better than it was.
So we all probably know if any of us have tried to buy a car,
prices are very high dealer inventories are very low used car prices are high.
Things are starting to normalize.
If you remember back in Q two, I think it was about 90,000 vehicles.
GM didn't finish because they lack semiconductors.
They said they got through about 75% of that volume
and expect more improve
In Q4.
So normalization things are getting a little bit more normal.
That's probably good for car buyers. It's fine for GM as well.
And then the other takeaway is
earnings pretty good. Right?
So 3.3 billion and operating profit that was better
than the street expected for the full year.
They didn't change their guidance,
but their guidance implies about another 33 plus billion in the fourth quarter.
That's also a little better than the streets currently projecting.
So while you know, the economy is a little shaky things that Jam are pretty good.
That's what I took away.
Now, all you talk about normalization.
So I want to talk about some of the trends that we've been watching with GM,
it's been hit hard of course by the rising costs of raw materials,
which squeezed margins forced the company to raise prices on its vehicles.
Is this now in the rear view mirror for GM as we come into this next quarter?
So yes, to a certain extent, right?
So, you know what is uh, you know, we can all look at the charts, right?
But, you know, the car prices are like 20% higher than they were pre pandemic, uh,
they're not going, you know, I wouldn't expect them to go back to, you know,
2019 levels, but the rates of increase are probably behind us, right?
You know, I guess that's how inflation works.
You reach a new plateau and then we all have to get used
to paying 40,000 for a car instead of 35,000 for a car.
So,
so the worst of the price increases is behind most of the cost increases behind them.
Remember this chip situation was resulting in rework
extra work before you could ship cars out.
Remember there's a story from the Wall Street Journal ford,
couldn't ship cars because of logos, that means they have to put the cars down and
and wait for those blue ovals to arrive.
That adds cost, the worst of that is behind us.
I think, I think these results show that again, you know,
things are getting a little bit better.
What's interesting, you know, is all of these cost increases,
they haven't resulted in lower profits.
So, you know, GM is probably, you know, at the mar
And happy that things, you know,
from an inventory perspective are a little tight and they
probably wanted to see things normalize nice and slowly.
They don't want these big swings.
So the big swings are behind us, you know,
depending on how the US consumer shapes up for 23
things are looking pretty good for GM and their peers.
And we have to of course talk about the hottest topic in auto right now,
which is electric vehicles.
General Motors plans to sell 30 different models of E. V.
S by 2025 are the company's electric vehicle ambitions enough
to appease investors and of course compete in increasingly crowded space
depending on your sound. My dog has an opinion on that.
Um listen, I can't believe we waited to question three talk about TVs
in the current quarter, GM achieved about 8% of north american tv market share.
That's nice. Um Listen, their whole strategy is a price point for everybody, right?
They have the Equinox coming out next year, that's supposed to be a $30,000 E. V.
They have the GMC Sierra coming out next year,
that's that'll that'll take on the cybertruck and ford's electric F 1 50.
So they they have big plans, they want to be selling a million E. V.
S a year in north America by 2025. And the way I put it is if they do it,
you know, shareholders will carry mary barra out on their shoulders.
Um you know, they're still selling, you know, I think they sold 15,000 E. V.
S in the quarter, right?
So they have big plans but we're gonna go from like
an annualized rate of about 60,000 to a million in 2,
2.5 years.
So um it is it is the big topic. It is the big watch item,
you know, will they make, you know, to a million in 2025 maybe not, but if they grow,
you know, 40 50 60% E.
V. Sales a year for the next few years, people will be pretty happy with that.
And the key is according to GM and E. V at every price point.
Yeah.
And that of course makes some of these vehicles, you know,
qualify for these tax incentives that we've been hearing so much about as well.
Obviously, you know, might convince consumers to buy GM.
Speaking of, let's talk about the competition with Tesla,
you know, Tesla still maintains a big league lead in the U. S. E. V. Market.
How is GM position to scale and attract TSG oriented investors as well.
You know, that's an interesting question.
You know, ford sold some green bonds this year.
You know, I know it's not GM question but ford sold green bonds and you know,
you can use green bond money to do climate projects,
they're using it to build electric vehicle plants.
GM could be the same, it'll be, you know, it's funny,
Tesla doesn't always play nice with the press and people, right?
So like they they're out of the S the S and P 600 I think it's a 600 E. S. G.
Index because they don't do all the reporting.
So Tesla is out, you know, some oil companies are in,
you know, it'll be it's interesting, right?
Like from a from a pure environmentalist perspective,
I think it'll be a long time before people
are truly convinced that the traditional auto industry,
gasoline powered auto industry, you know,
would qualify as sort of a climate benefit.
Um, Tesla certainly, you know, Elon musk's stated vision, you know,
Tesla was founded to put the earth on a path to sustainable energy future.
Um, but if you if you just look at what GM and ford and the peers say right,
they want to be selling 50% E.
V. S by 2030 they want to be selling like all E. V. S by 2040.
So the transition is underway,
when when investors become convinced that it will all work is one question.
And you know, when E. S. G. Investors um
Will be convinced that, you know, the car industry is a benefit to the,
to the planet is sort of another question,
I would put it in the same category as this 2025 goal, right?
They have big goals and and they're putting
their money where their mouth is are building.
Plants are spending billions. It just remains to be seen how it all turns out.
Al thank you so much for your time this morning.
It's unfortunately all the time we have left.
That's AL root senior writer at parents.