
General Motors (NYSE:GM) said on April 30 that its first-quarter net income nearly doubled from a year ago, to $2.1 billion, as strong pricing on trucks and SUVs — and a boost from GM’s investment in Lyft (NASDAQ:LYFT) — helped offset production disruptions and ongoing weakness in China.
Excluding one-time items, GM earned $1.41 per share, well ahead of the $1.10-per-share average estimate from Wall Street analysts polled by Thomson Reuters. But GM’s $34.9 billion in revenue fell slightly short of the consensus analyst estimate, and GM’s share price dropped in early trading after results were released.
What helped and hurt
Here are the key factors that drove (and mitigated) GM’s 11.5% year-over-year decline in EBIT-adjusted.
What hurt:
- Lower sales volumes in North America. Sedan sales declined, supplies of GM’s new pickups remained tight, and supplies of GM’s big (and hugely profitable) truck-based SUVs were limited because of planned downtime at the factory that makes them. (GM took the downtime in order to make changes at the factory ahead of the launch of all-new big SUV models later this year.)
- Lower sales volumes in China, where the overall new-car market has slumped.
- Continued cost headwinds related to commodity prices and tariffs.
- Strong pricing on GM’s all-new pickups. GM said that average transaction prices, net of incentives, on the crew-cab versions of its new trucks (the first versions to go into production) were almost $5,800 higher than prices on 2018-model crew-cab trucks in the first quarter last year.
- Sales of GM’s new-generation crossover SUVs continued to be strong, helped by the new Cadillac XT4 and Chevrolet Blazer models. The automaker’s current crossovers have higher profit margins than the models they replaced — and (generally speaking) higher profit margins than the sedan sales they are displacing.
- revalued its stake in Lyft, held since early 2016, in the wake of the ridesharing company’s initial public offering during the first quarter. That added about $300 million to GM’s net income.