GM Cuts Guidance on Rising Commodities, Brazil and Argentina

General Motors reported in linesecond quarter earnings Wednesday but warned going forward on higher commodities and exchange rates in Brazil and Argentina. GM had already warned on the negative affects of tariffs. $GM fell 5% on the news premarket.

General Motors reported in-line second quarter earnings Wednesday but warned going forward on higher commodities and exchange rates in Brazil and Argentina. $GM had already warned on the negative affects of tariffs. $GM fell 5% on the news premarket.

GM mary barra

GM CEO Mary Barra

The June sales were lifted by unexpectedly strong sales of high-margin pick-up trucks and sport utility vehicles, which have so far ignored higher gasoline prices and interest rates. That said what Ford, General Motors and Fiat Chrysler say about the future impact of tariffs on earnings forecasts is what analysts will tune into hear.

General Motors Co. (NYSE: $$GM) Earnings Matched Forecasts Before Open Wednesday

$1.81 EPS matched $1.81 on $36.80 billion under $36.86 billion revenue forecast

 Earnings

$GM earned an adjusted $1.81 a share on net revenue of $36.8 billion. This matched expectations on adjusted earnings of $1.81 but lower on revenue of $36.86 billion expected.

General Motors Company NYSE: GM

Market Reaction Pre-market $37.30 −2.18 (-5.52%)

Highlights

  • Deliveries in the US rose 4.6% year-over-year to 758,000 ahead of industry average of up 2.2%.
  • GM’s market share in the US rose 0.4 percentage points thanks to “very strong truck, SUV and all-new crossover sales.”
  • inventory fell to 83 days supply versus 105 days a year ago.

CEO Mary Barra said in the earnings statement. “We faced significant external challenges, but delivered solid results this quarter. The fundamentals of our business are strong and we remain focused on our plan – delivering great vehicles, developing technologies to transform personal mobility and creating long-term shareholder value.”

Outlook

GM lowered its full-year 2018 earnings forecast to an adjusted $6 a share, down from its prior mid-$6 range as a result of rising commodity costs and an unfavorable foreign exchange impact of the Brazilian real and Argentine peso. 

 GM Earnings Q2 18

GM Second Quarter Earnings Preview

What Analysts Will Be Watching

General Motors filed at the end of June with the U.S. Commerce Department warning that the expansive U.S. tariffs on imported vehicles being considered by the Trump administration will damage $GM, U.S. jobs and American global presence.

“Increased import tariffs could lead to a smaller GM, reduced presence at home and abroad for this iconic American company, and risk less – not more – US jobs”

GM Commented The U.S. has been aggressively pushing tariffs with steel and aluminum the first big ones and then was steadfast where he stands at the recent G7.

“The threat of steep tariffs on vehicles and auto component imports risks undermining GM’s competitiveness against foreign oil producers by erecting broad brush trade barriers and increase our global costs, remove a key means of competing with manufacturers in lower wage countries, and promote a training environment in which we could be retaliated against in other markets”

  • Shares closed Friday at $1,817.75  with a 52-week range is $931.75 to $1,858.88

 

The Ford Motor Co. (NYSE: $F) Reports Before Close Wednesday

Analysts consensus is $.34 in earnings per share (EPS) and $36.2 million in revenue 

What Analysts Will Be Watching

Barclays analyst Brian Johnson said in a note:

“Auto stocks have been getting whipsawed by macro volatility around trade tensions . . . but we would point out that trade with China is almost negligible . . . due to ‘source in region, build in region, sell in region’ strategies. And while tariffs on European vehicles and on Nafta flows would sting, we see potential political solutions on both fronts.”

  • Shares closed Friday at $10.55  with a 52-week range is $10.14 to $13.48

June Auto Sales

June Vehicle Sales (except GM quarterly)

  • Ford up 1.2% vs  +.08% estimate 
  • Fiat Chyrsler up 8.0% vs 7.8% estimate,
  • Honda up 4.8% vs +3.7% estimate 
  • Toyota up 3.6% vs +3.5% estimate 
  • Nissan up 1.2% vs -7% estimate 
  • Volkswagen US up 5.7% vs +3.6% estimate
  • Subaru up 15% vs 5.7% estimate
  • Hyundai-Kia up 9% vs +4.9% estimate
  • ++General Motors $GM Q2 US auto sales +4.6% vs +4.5% estimate

++ General Motors in March – No longer Reporting Monthly Sales just quarterly

Fiat Chrysler Automobiles $FCAU

  • Edmunds forecast:+7.0% Cox Automotive forecast: +7.8% Actual results: +8.0%
  • U.S. sales , including those to fleet customers, rose 8 percent to 202,264
  • U.S. retail deliveries highest since July 2005.
  • The Jeep brand led the way again with a 18.9% sales increase to 86, 989
  • Included a 88.6% boom in sales of the surging Jeep Cherokee.
  • Included a 82.2% boom in sales of the surging Jeep Compass
  • Chrysler brands down 31.7%
  • The Pacifica minivan now made up 71.1 percent of the Chrysler brand’s total sales for the first six months of the year.
  • Ram brand was up 6.3 percent,
  • Dodge increased 9 percent.
  • Fiat brand down 36.4%
  • Fiat Chrysler rumored to be considering ending the Chrysler brand and discontinuing North American sales of Fiat.

Ford Motor Co. $F

  • Edmunds forecast: +0.8% Cox Automotive forecast: -0.1% Actual results: +1.2%
  • U.S. sales, including those to fleet customers, rose 1.1 percent to 230,635
  • SUV Sales rose 8.9%
  • Pickups and Vans rose 3.2%
  • F-series pickup, the most popular model in the U.S., is on pace to top 2004’s full-year record of 939,511
  • Ford sold 79,204 F-series pickups in June, up 1.7 percent.
  • Sales of the F-Series rose 4.9 percent for the first six months.
  • Lincoln luxury brand rose 2.8%
  • Passenger Cars fell 14%
  • Ford said the “generational shift” from passenger cars to SUVs continues
  • Ford recently announced it would discontinue sales of the Fusion, Fiesta, Focus and Taurus cars.

General Motors. $GM (Q2 Sales)

  • Edmunds forecast: +5.6% Cox Automotive forecast: +4.9% Actual results: +4.6%
  • U.S. sales, including those to fleet customers, rose 1.1 percent to 758,356 for Q2
  • Flagship Chevrolet brand sales rose 6.2 percent
  • Silverado pickup truck sales  rose 15.7 percent  to 155,529 vehicles. The Silverado is GM’s best seller in the U.S.
  • GMC brand increased 6.6 percent
  • Cadillac brand rose 3 percent
  • Buick lineup fell 12 percent.

Toyota

  • Edmunds forecast:+3.5% Cox Automotive forecast: -1.2% Actual results: +3.6%
  • Toyota sold 209,602 vehicles for June in the U.S.
  • Toyota brand sales up 4.4%
  • Lexus luxury brand down 2.6%.
  • Toyota passenger cars fell 9.2%,
  • Toyota sales of SUVs, crossovers and pickups rose 13.7%. 
  • Standout was the Highlander SUV sales up 25.3 percent.

Honda

  • Edmunds forecast: 3.7% Cox Automotive forecast: 3.7% Actual results:+4.8%
  • Honda sold 146,563 vehicles in the U.S. in June.
  • Honda brand sales rose 5.0%
  • Acura luxury brand rose 3.5%
  • Passenger car sales fell 2.4% 
  • The Accord sedan continued its sales slump falling another 10.3%.
  • The Pilot SUV’s popularity continued rising  with 35.9% 
  • CR-V was the best seller for the month up 17.5%

Nissan

  • Edmunds forecast: -8.9% Cox Automotive forecast: -9.1% Actual results: -4.1%
  • Nissan sold 131,832 vehicles for June in the U.S.
  • Nissan brand sales fell 3.8% 
  • Infiniti brand sales fell 7.1%.
  • Nissan Rogue crossover sales totaled 38,413, up 18.1%, and accounted for 29.1% of the company’s sales.

Hyundai-Kia

  • Edmunds forecast: 4.9% Cox Automotive forecast: 6.6% Actual results: 9%
  • Hyundai sales up 17.5 percent to 64,052 vehicles.
  • Hyundai luxury Genesis brand sales collapsed, down 50.7% for the month.
  • Hyundai sister automaker Kia sales rose 0.8% to 56, 571 vehicles

Subaru

  • Edmunds forecast: Not provided Cox Automotive forecast: 5.7% Actual Results 15%
  • Subaru sold 59,841 vehicles in the US in June
  • Beats the once-much-smaller Kia brand and nearing level of Hyundai.

Volkswagen Group

  • Edmunds forecast (not including Porsche): 3.6% Cox Automotive forecast: 3.3% Actual results: +4%
  • The Volkswagen brand was up 5.7% and sold 28,941 vehicles in June
  • Tiguan crossover is VW’s best seller 
  • Sales of the Audi luxury brand rose 0.3%. 

May Auto Sales

May Vehicle Sales

  • Ford up 0.5% vs -0.6% estimate 
  • Fiat Chyrsler is up 11.0% vs 7.4% estimate,
  • Honda +3.1% vs +2.9% estimate 
  • Toyota -1.3% vs -0.6% estimate 
  • Nissan -4.1% vs -8.9% estimate 
  • Volkswagen US +4% vs +5.9% estimate

NB: General Motors in March – No longer Reporting Monthly Sales

GM today announced it will report sales only quarterly. “Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market,” statement from GM. 

Note General Motors Edmunds forecast: 13.2% and Cox Automotive forecast: 11.7%

Fiat Chrysler Automobiles $FCAU

  • U.S. sales , including those to fleet customers, rose 11 percent to 214,294
  • U.S. retail deliveries 167,785 vehicles highest since July 2005. Fiat Chrysler Edmunds forecast: 8.9% Cox Automotive forecast: 11.9% 
  • The Jeep brand led the way with a 28.8% sales increase to 97,287.
  • Included a 62.5% boom in sales of the surging Jeep Cherokee.
  • Chrysler brands down 18.1%
  • Fiat brand down 46%
  • Fiat Chrysler rumored to be considering ending the Chrysler brand and discontinuing North American sales of Fiat.

Ford Motor Co. $F

  • U.S. sales, including those to fleet customers, rose 0.7 percent to 242,824
  • U.S. retail sales in May rose .5% to 163,796
  • Truck sales rose 9.4%, with F-Series sales up 11.3%, marking 13 consecutive months of year-over-year gains
  • Transit sales up 12.4%
  • E-Series sales dropped 27.5%.
  • SUV sales increased 0.5%, as a 13.7% rise in Lincoln brand SUVs to 7,295 vehicles offset a 0.7% decline in Ford brand SUVs to 74,406 vehicles.
  • Passenger car sales crashed 13.3%, with Ford branded car sales losing 11.7% and Lincoln brand sales collapsing 36.5%.
  • Ford said the “generational shift” from passenger cars to SUVs continues
  • Ford recently announced it would discontinue sales of the Fusion, Fiesta and Taurus cars.

Toyota

  • Edmunds forecast: -0.6% Cox Automotive forecast: 0.8% Actual results: -1.3%
  • Toyota sold 215,321 vehicles for May in the U.S.
  • Toyota brand sales down 1.5%
  • Lexus luxury brand down 0.1%.
  • Toyota passenger cars fell 11%,
  • Toyota sales of SUVs, crossovers and pickups rose 5.7%. 

Honda

  • Edmunds forecast: 2.9% Cox Automotive forecast: 1.1% Actual results:+3.1%
  • Honda sold 153,069 vehicles in the U.S. in May.
  • Honda brand sales rose 4.3%
  • Acura luxury brand fell 8%
  • Passenger car sales fell 2.7% while rest of  lineup rose 9.2%.
  • The Accord sedan continued its sales slump falling another 15.9% to 28,212.
  • The Pilot SUV’s popularity continued rising 36.1% to 13,573.
  • New May sales records for American Honda trucks (+9.2%), Honda trucks (+11.6%), Pilot (+ 36%), and CR-V (+11.6%)

Nissan

  • Edmunds forecast: -8.9% Cox Automotive forecast: -9.1% Actual results: -4.1%
  • Nissan sold 131,832 vehicles for May in the U.S.
  • Nissan brand sales fell 3.8% 
  • Infiniti brand sales fell 7.1%.
  • Nissan Rogue crossover sales totaled 38,413, up 18.1%, and accounted for 29.1% of the company’s sales.

Hyundai-Kia

  • Edmunds forecast: 0% Cox Automotive forecast: 5.5% Actual results: 9%

Subaru

  • Edmunds forecast: Not provided Cox Automotive forecast: 5.7% Acual Results %

Volkswagen Group

  • Edmunds forecast (not including Porsche): 5.9% Cox Automotive forecast: 14.8% Actual results: +4%
  • The Volkswagen brand sold 31,211 vehicles in May
  • Tiguan crossover VW’s best seller with sales of 8,579, accounting for more than 27% of VW sales.
  • Sales of the Audi luxury brand rose 0.6%. Subaru Edmunds forecast: Not provided Cox Automotive forecast: 5.1%

May sales for the industry were expected to decline 1 percent from a year ago, industry consultants J.D. Power and LMC Automotive said. Retail sales were projected at 1.27 million. The seasonally adjusted annual sales rate in May was estimated at 17 million, according to analysts polled by Reuters.

Kelley Blue Book said average new vehicle transaction prices hit $35,635 (26,757.4 pounds) in May, up 3.4 percent from a year ago, driven by still strong demand for trucks and SUVs. Average transaction prices on full-size pickups climbed to $48,213, while full-size SUVs jumped to $63,349.

In 2017 U.S. auto sales fell 2 percent after hitting a record high of 17.55 million in 2016. Sales are expected to fall again in 2018, partly as a result of rising interest rates and fuel prices. There is also a mass  used vehicles coming off lease.

Source: AlphaStreet, GM, USA Today

From The TradersCommunity Research Desk

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