GM Looking Strong for 2018 Due to Vehicle Prices and Cost-Cutting
General Motors revealed quarterly results that were better than expected, all thanks to cost-cutting and higher vehicle prices that balances the decline in US sales volume. The automaker is confident 2018 would be a strong year both in North America and in the global market.
Due to its to cost-cutting endeavors and higher transaction prices for its in-demand SUVs and pickup trucks in North America,GM’s global pre-tax margin went up to 8.2 percent in the quarter, which is better than 6.5 percent in the same quarter way back in 2016.
The impressive performance from the Detroit-based company puts it above the struggling cross-town rival Ford in increasing its own profitability. Ford fell to 3.7 percent in terms of its fourth-quarter automotive operating margin, which is a downhill venture from 5.7 percent a year earlier.
GM had positive results despite the fact it was only able to sell 135,000 fewer vehicles to dealers in North America during the fourth quarter and almost 450,000 less for the whole 2016.
Chuck Stevens, chief financial officer of GM, said that they feel confident about the brand’s performance and that it is “not overly concerned about inflation.”
“Our forecast is premised on continued growth in the U.S. economy,” Stevens explains. He added that GM is forecasting its interest rates to increase 75 basis points in 2018.
“As long as these are moderate (interest rate) increases, they are easily digestible,” he further added.
The automaker played it wisely by addressing unsold vehicles during 2017 with production halts, which answers the trouble it has foreseen.
GM also pulled out of India and parts of Africa to further balance things out, selling to France's PSA Group its Opel/Vauxhall unit.