by DETROIT (AP) — U.S. customers who bought a new General Motors vehicle in the latest quarter paid an average of just under $49,900, a price that helped push the company’s net income up 15% from a year ago.
GM Chief Financial Officer Paul Jacobson said he doesn’t see his company cutting prices much, despite industry analysts’ predictions of higher U.S. new vehicle inventories and deeper discounts.
The Detroit automaker earned $2.92 billion in the April-June period and posted revenue of $47.97 billion. Excluding one-time items, the company earned $3.06 per share, 35 cents above Wall Street estimates, according to data provider FactSet, and revenue also came in better than expected.
Although the average selling price was down slightly from a year earlier, GM sold 903,000 vehicles to its North American dealers in the quarter, 70,000 more than the same period in 2023. Sales at its international unit, however, fell 7,000 to 140,000, the company said.
GM is also restructuring its China operations, which has weighed on its results. While revenue from its Chinese joint venture rose to $4.7 billion in the second quarter, up from $4.1 billion in the first quarter, this year’s results are so far below the $9.6 billion it made in the fourth quarter. Deliveries are also down this year.
CEO Mary Barra said on a conference call that GM is taking steps to reduce inventories in China and is also looking to better align production with demand. She added that the company expects the rest of the year to be tough in the market and is actively working with its joint venture partner to address that.
“It is clear that the actions we have taken, while significant, have not been sufficient. We expected to return to profitability in China in the second quarter. However, we have recorded a loss and we expect the remainder of the year to remain challenging as the headwinds are not easy to address,” Barra said. “We are working closely with our joint venture partner to restructure the business to make it profitable and sustainable.”
GM shares, which had risen sharply before the open, fell nearly 6% in early trading.
Earlier this year, GM predicted a 2% to 2.5% price decline this year, but so far that hasn’t come to fruition, Jacobson said. Instead, the company now expects a 1% to 1.5% decline in the second half.
GM’s prices have fallen slightly, Jacobson said, because more of its sales are coming from lower-priced vehicles like the Chevrolet Trax small SUV, which starts at $21,495, including freight. The company, he added, has seen strong sales of higher-priced pickups and larger SUVs.
According to Edmunds.com, U.S. buyers paid an average of $47,616 per vehicle in June, down 0.7 percent from a year earlier. Per-vehicle discounts more than doubled from a year earlier, to $1,819.
The U.S. new vehicle fleet increased to just under 3 million vehicles, up from about 1.8 million a year ago.
While other companies have increased their discounts, GM has managed to remain relatively consistent while gaining market share in the United States, Jacobson said.
“So far, what we’ve seen in July looks a lot like what we saw in June,” Jacobson said. The company “is making sure we’re putting products out there that our customers like, and the pricing is adjusting itself,” he said.
Sales and pricing are among the reasons GM slightly cut its full-year net income forecast, from a range of $10.1 billion to $11.5 billion, to a new range of $10 billion to $11.4 billion.
GM also said it plans to build and sell between 200,000 and 250,000 electric vehicles this year. In the first half of the year, however, it sold just 22,000 in the United States, its largest market.
Jacobson conceded the company still has a ways to go to meet its full-year targets, but said the new Chevrolet Equinox small SUV is just reaching showrooms and production of other models is ramping up as battery plants in Tennessee and Ohio ramp up production.
The company, he said, will add $400 million to its marketing spending in the first half of the year from July to December, partly to build awareness of its electric vehicles. Full-year marketing spending, however, will remain lower than in 2023, he added.
GM spent $500 million in the second quarter on its struggling business. Autonomous Cruise Vehicle Unit$100 million less than a year ago. The company said it would indefinitely postpone building the Origin, a six-passenger robotaxi that was planned for Cruise.
The autonomous vehicle unit will rely on next-generation Chevrolet Bolt electric vehicles as it attempts to resume passenger transportation without a human safety driver.
Last year, Cruise lost its license to autonomously transport passengers in California after one of its robotaxis dragged a pedestrian crossing the crosswalk — who had just been hit by a human-driven vehicle — across a dark San Francisco street before stopping.
GM hoped Cruise would generate $1 billion in annual revenue by 2025, but reduced massive investments in service.
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AP Business Writer Michelle Chapman contributed to this report.
