GM scores unexpected victory in Q2, profits boosted by strong pricing

General Motors surpassed analysts’ forecasts for the second quarter, posting substantially improved earnings compared to the prior-year period.

GM’s earnings:

• The automaker posted quarterly revenues of $47.9 billion, an increase of 7% year-over-year. This is much better than the $45.46 billion it was projected to announce, which would have been only marginally improved from Q2 2023.

• While recent years have seen competing manufacturer profit margins shrink, GM appears to have staved off this trend in Q2. The brand reported $2.9 billion in net income for the period, up 14% year-over-year. Nevertheless, this is slightly behind its performance in Q1, during which it earned $2.95 billion in net income, roughly 26% higher than the previous year.

• Behind the scenes, stable but reasonable pricing has kept GM’s profits high while a resurgence in demand for small to midsize SUVs has helped drive the brand’s sales. As a result of these factors, the automaker’s Q2 sales were the highest in three years, explaining the period’s impressive earnings.

A look ahead:

• In light of its strong performance, the automaker increased its annual adjusted earnings guidance for the second time this year, upping its estimate from a range of $12.5 billion and $14.5 billion to $13 billion and $15 billion.

• However, its full-year net income is projected to hit between $10 billion and $11.4 billion, down from its initial forecast of $10.1 billion to $11.5 billion.

Bumps in the road:

• GM’s continued dominance in the U.S. was the primary driver of its strong earnings for the period. However, its international business suffered heavily due to aggressive competition in China. The automaker lost $104 million in equity income in the country and saw sales decline almost 30% year-over-year in Q2.

• GM also posted a $600 million charge for suspending production of the Cruise Origin robotaxi. Going forward, the Cruise subsidiary will instead rely on customized Chevrolet Bolt EVs for testing.

Bottom line: Overall, GM had a strong quarter thanks to impressive sales in the U.S. and stable pricing. It remains on track to achieve its financial goals for 2024, despite some of the headwinds that have challenged its competitors.

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