Despite taking on a huge chunk of an expensive electric vehicle recall, General Motors posted $2.54 billion in second-quarter net income, a 52% increase over a year ago, according to the Associated Press.
Continued strong vehicle sales and pricing, as well as cost cuts, led to the better-than-expected quarter. The Detroit automaker today raised its financial guidance for the full year — saying it will post net income of between $9.3 billion and $10.7 billion — with one qualification: that it can negotiate union labor contracts without a strike.
Customers paid about $1,600 more per vehicle last quarter than from January through March, with an average U.S. sale price of $52,000. Discounts and inventory remained flat as the company sold 19% more vehicles than a year ago in the U.S., its most profitable market.
GM also found $1 billion in cost savings on top of $2 billion the company promised earlier for the full year. The savings came through lower salaried employee expenses due to 5,000 workers taking buyouts, as well as savings in marketing and reductions in administrative costs and vehicle manufacturing complexity.
Excluding one-time items, GM said it made $1.91 per share, beating Wall Street’s estimate of $1.87. Revenue of $44.75 billion soundly beat analysts’ estimate of $42.13 billion.
GM has set a goal of building only electric passenger vehicles by 2035. It has pledged to have 30 electric vehicle models for sale globally by 2025.
Hitting its financial forecast numbers may be difficult because the company is in the middle of what are expected to be contentious negotiations with U.S. and Canadian auto workers.
The union wants cost of living and general pay raises, an end to tiers of workers making different wages, restoration of pensions for all workers, and other items. The company is leery of increasing its expenses as it ramps up to spend billions developing electric vehicles.
