Big automakers expected to take profit hit after Q2 struggles

Detroit automakers are expected to post disappointing numbers in their second-quarter earnings reports this week, following a shift among consumers towards affordable vehicles and a software outage that interrupted sales for thousands of dealers across the U.S.

Big Three earnings preview:

General Motors: is in a slightly more favorable position than its competitors as it has kept car prices stable throughout 2024 rather than pursuing aggressive discounts, according to CNBC.

• The automaker is expected to report a 1.6% increase in quarterly revenue, earning $45.46 billion even though it saw slightly lower sales during the period.

• However, investments in electric vehicle production and business interruptions caused by the CDK Global cyberattack are almost certain to eat into the brand’s earnings. LSEG estimates place the company’s Q2 profits 7.7% lower year-over-year.

Ford: has dialed back its investments into electric vehicles in recent months while continuing to prioritize cost-cutting measures, a focus it has maintained since its poor performance in 2022.

• Analysts expect the brand to post quarterly revenues of $44.02 billion of sales gains of 1%, slightly behind its chief Detroit rival but 3.8% higher than in Q2 2023.

• Nevertheless, the automaker is also predicted to take an even heavier profit hit, losing 10% of its prior-year earnings.

Stellantis: is likely in the weakest position out of Detroit Three, having lost a significant portion of its sales and market share in only a few years. These losses have been driven by its refusal to adjust prices in the face of the industry’s affordability challenges, even as its competitors have successfully driven sales through price cuts.

• The company is expected to report revenues of roughly $49.39 billion for the quarter, down more than 11% year-over-year.

• While its reticence to cut MSRPs has kept its enviable profit margins intact, this strategy may be nearing the end of its use. Analysts expect its adjusted earnings per share to decline 18.9%.

Bottom line: The Detroit Three faced an uphill battle in Q2, a fact reflected in the cautious estimates shared by analysts ahead of their earnings reports. That being said, July is expected to be a busy month for the car industry, hopefully undoing the last-minute delays caused by critical software outages.

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