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Friday, July 24, 2015

Why $1.1 Billion in GM Profits Is Great News



General Motors announced this morning net income of $1.1 billion for the second quarter – and that’s great news from a product standpoint. Full coffers at GM embolden green lights just in time for the new Camaro debut, and other upcoming products.
Let’s get the technical stuff out of the way for you financial geeks out there. Then we can talk product. Net revenue was $38.2 billion, which is down because of currency devaluation from last year’s $39.6 billion. But if all things were equal, earnings would actually be up $900 million.

2016 Chevrolet Camaro Convertible

The even better news, according to GM CEO Mary Barra, is this happy money ride should continue through the end of the year. She says the second half of the year should be as good, if not better, than the first. And that’s even with the Chinese market starting to tank a little bit.
What’s coming out in the second half of the year? The all-new Camaro, which we saw unveiled in May. What market is seeing record margins? North America. As Automotive News reports, “North American pretax profit was $2.78 billion, the highest since GM’s 2009 bankruptcy and double the recall-plagued second quarter of a year ago.” So, what product is going to benefit from record margins in North America? Yup, the Camaro.


But, the real money is coming from crossovers and trucks for GM. Chevrolet truck sales are up 32 percent this year. That means newer and better trucks and crossovers rolling out. Chevrolet is developing a new crossover between the Equinox and the Traverse that should be a great fit for this market and others and probably look sharp.

Remember how bland the Chevrolet Equinox was when it first debuted? It was a solid vehicle, but damn plain on the inside and out. As GM has recovered from its Government Motors days, the Equinox has become a much more compelling crossover (be honest, it has). That philosophy is evolving across the product line as corporate coffers swell.