GM can mitigate crash in the red – share gains

The US automotive group has suffered a good $800 million loss in the second quarter. But GM has reserves – and the markets are relieved.

General Motors has slowed the Corona-related crash thanks to massive cost reductions and the sale of profitable vans. The largest US automaker reported a net loss of $806 million for the second quarter on Wednesday. Analysts had expected a significantly higher drop due to the weeks-long production shutdown.

The stock rose by almost four percent before the exchange. A year ago, it had made a profit of $2.4 billion. For General Motors, the production had been resting in North America because of containing the pandemic until 18 May.

The result illustrates General Motors’ resilience and profitability at a time when the company is also investing in the future, said CFO Dhivya Suryadevara. In the meantime, the plants for large pickups and SUVs were running in three shifts again. Almost all other locations are also back in operation. GM is working flat out to supply the dealers with vehicles.

However, GM does not dare to make a forecast due to the ongoing sales crisis. Management merely referred to core liquidity of $30.6 billion at the end of the quarter. Between April and June, $8 billion in cash flowed out during the shutdown.

Suryadevara said that if the US economy continued to recover, a $7-9 billion cash flow would be possible in the second half of the year. After the slump in sales in recent months, there are now signs of a recovery. After rising corona numbers in the southern and southwestern states, doubts about a rapid recovery in the economy are increasing in the USA.

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