GM Predicts Positive Outlook for 2019

To close out the first official week of the New Year, General Motors announced new plans to close as many as five of their North American assembly plants by the end of the year.   This decision will, of course, cut thousands of jobs but it will add between $2 and $2.5 billion to the company’s bottom line this year. 

With that, though, the carmaker said it predicts a strong year in terms of global car sales.  Apparently, General Motors’ plan includes either engineering new or redesigning existing SUV and pickup models in several markets.  This could also include a sixth sedan mode in the United States. 

GM CEO Mary Barra notes that while vehicles will be going out of production, the company will offer a full-year of sales for the new Chevrolet Blazer and Cadillac Xt4, which are both SUV models.  In addition, GM will offer redesigned models for the Chevrolet Silverado and GMC Sierra pickup trucks.

GM President Mark Reuss also assured that they have not decided whether or not to discontinue the Cadillac T6 sedan even though they are definitely idling the Detroit Hamtramck plant that builds this particular model.  He also noted that there is room in the Cadillac lineup for a vehicle of the same size, but did not confirm, necessarily, their plans to build and release one.

That said, some analysts predict General Motors will likely lose one percentage point in market share related to the sedans they are cutting and also—and probably more likely—because it will need to cut at least another 2,000 white-collar jobs and several hourly jobs at various engine plants. This will add to the 8,000 job cuts GM has already announced.  Still, Barra comments that GM does not intend to idle any more plants or to continuing trimming labor. 

Barra asserts, “What we announced is what we have in place for this year.  That’s what we think we need to do to make the company sustainable. There’s nothing more that’s been announced based on current business conditions.”

At the end of the day, then, GM has expectations to report earnings between $6.50 and $7.00 per common share.  Also, they will have an adjusted automotive free cash flow between $4.5 and $6 billion.  These are higher than the company expects for its full year 2018 report, which will be announced next month. 

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