GM Takes a Pandemic Beating

General Motors’ second-quarter earnings report is out, and there’s red ink to report.

Hammered by the coronavirus-related shutdown of its domestic manufacturing facilities and a corresponding sales slide, the automaker reported an $800 million loss in Q2 — a far cry from the rosy, $2.42 billion profit it saw a year earlier.

GM’s cash burn was also a five-alarm affair, but one element of the report was hardly depressing at all: the company’s Chinese sales.

Thanks to the timing of the virus, which clobbered China in Q1, the second quarter of 2020 saw sales in that marker sink only 5.3 percent, year over year. In North America, however, GM’s volume dropped 35.5 percent.

Globally, revenue plunged 53 percent to $16.78 billion, with $8 billion erased from its cash pile as factories idled and workers stayed home. Those plants reopened in mid-May with new health protocol and various protective installations in place, though the return to work has been a rocky one. Absenteeism remains high. Still, GM’s automotive liquidity stood at $30.6 billion at the end of the quarter, so the company’s not begging for crusts of stale bread on a street corner somewhere.

All that said, GM made it through what everyone anticipated to be an awful quarter better than many expected. GM credits the continued popularity of high-margin pickups during the lockdown — a phenomenon all Detroit Three members sustained via big incentives and attractive financing offers. The push continues to rebuild depleted inventories.

“The company is working all avenues to increase U.S. dealer stocks and has restarted all U.S. full-size pickup truck and full-size SUV plants to three shifts, and nearly all other plants to pre-pandemic shift levels,” the company said in its report. “Through July 25, landed U.S. dealer stock has grown by 9 percent, and total vehicles in-transit was up 6 percent, since June.”

GM also tossed some kudos to the almost silent introduction of the tweener Chevrolet Trailblazer and Buick Encore GX crossovers, which landed at dealerships just as the country was attempting to pull out of the lockdown.

“They’ve gained retail market share every month since launch and combined, have captured more than 10 percent of the small SUV segment,” GM stated, citing J.D. Power data.

a version of this article first appeared on TTAC

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