GM - Earnings call transcript Q1 2018 | General Motors Company

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the General Motors Company First Quarter 2018 Earnings Conference Call.

During the opening remarks, all participants will be in a listen-only mode. After the speakers' opening remarks, we will conduct a question-and-answer session.

As a reminder, this conference is being recorded Thursday, April 26, 2018. to of conference Corporate like Suryadevara, to now President Vice Finance. would turn over the Dhivya I Please go ahead, ma'am.

Dhivya Suryadevara

quarter results Thanks, operator. as the financial us, for you first for Good morning we and review thank of XXXX. joining GM's

this pages notes press GM's key in to from Included conference will each materials the set in Executive Investor the website. the are takeaways CFO. morning, this broadcasting published GM call We're the This chart followed was also Barra, in on VP color Mary provide this remarks; results. morning, on GM's Chairman order call Our the the Chuck opening chart release Relations provide CEO, and Stevens, by and we issued some morning, brief have available and via materials webcast.

open We for line the questions analyst the will then community. from

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Mary Teresa Barra

in the products, Dhivya, good GEM quarter, including restructuring through planned first Korea, pickups in line managing and Thanks future to morning, our for everybody. with joining. challenges downtime Thanks, elevated our expectations and America, investments South and in We vehicles. generated in results the in North full-size related

adjusted of of and $XX.X EBIT revenue margin EPS diluted billion. the at look of numbers, X.X% if So, net our adjusted was We billion, EBIT $X.X adjusted $X.XX. had we

to include to flow truck our this our as four-quarter negative due business, was the adjusted a launches typical year on lower GEM agreement, vehicles. cash The and incremental into union to will our we and by billion, GMC the our expected, ROIC support labor taking move full-size new stage Silverado XXXX. transition Our performance stronger pickup, through actions spending early we adjusted Sierra truck restructuring, members. capital seasonal morning production ratified GM $X.X higher automotive billion this the XXXX pattern free planned the truck have are basis. And contributors than Korea was trailing on in to Chevrolet and for also we as and and set In a which new key negotiated Korea, was the $XX historic XX%

future. to viability management a and to action taken at enable the GM profitable Korea. will for employees have in foundation reducing in set manufacturing decisive for level these vehicles be produced enterprise Our the Combined capacity, an with actions

in The binding part and into to we $XXX Korea. a Korean will between As all crossover, we improving operating Development the $XXX we in at days. investing of GM are achieve playing in adjusted we reduce the achieved be the on we is where working coming are by segments, Financial, Globally, costs. compete and truck get the solidly you deal, GM the on to right SUV of the full-year to segments, market the our to growing mix expect core and million finalize core and into business popular details track and will record relentlessly and KBD including are GM agreement in where subject every million, win of we guidance minutes. Bank to few products in by this in by across focusing EBIT the returns announced board, in January. deal GM profitable if But bit of Korea, this remarks his the in more look a a we Chuck

aggressive most our We through are halfway portfolio product ever. renewal

are Chevrolet SUVs first growth. Terrain, and U.S. brands the As the up newest rose driving led GMC in and quarter despite year-over-year the and of our the the Escalade Baojun in all newest GM's sales Traverse China by Equinox sales Deliveries Cadillac crossovers year-over-year the XXX. XXX doubled crossovers and in and X% and total new In competition the were segment. across expected, XX% U.S., crossover

brand's look let's accelerate Steve where So to take a closer Carlisle, a we at recently further appointed Cadillac, new leader, the progress.

grew Our by led global QX China. year-over-year XX.X% in continued growth sales

to SUV performance new an XTX began later vehicle will year. launch the market of models have our as Cadillac averaging U.S. improve XXXX. income through cadence years. four to outpacing equity performance expect strong XTX one is and every record with with the the China double six over this the in The in volume we opportunity record profit luxury last that Cadillac increases, We And Cadillac see quarter. sales months we GM the new next year's

future. its understand Last automotive largest positive vehicles. the the in world's two Velite X hybrid Regarding China, on already the plug-in countries demand to electric Velite the after interdependence and sales will just of SUV between month, compact XX launched we surpassed it domestic years we new XX,XXX China vehicle to sell add venture very global units. decades U.S.-China and capitalize two trade, to with the on our for EV markets. an is portfolio have strategy fast-growing more brand and experience in vehicles was XXX our believe both Buick for million important have than X X XXXX, all-electric China is our and created. to energy partners value Baojun, track joint it

customer deep capabilities version future emissions and gives a hardware of the experience, in the In addition, Cruise production advantage We vision and zero mobility integration. all enhance our roof and in competitive will we announced leveraging our achieve with AV, crashes, of technology to zero the world a us we continue this zero one build AV invest congestion. to of and space. innovation redefine software Having under the

be dense been urban in environment paramount our and in progress safety in has scale commercialization effort. to the are will making on at We continue achieving XXXX, commercialization and

cost. all are to to and using partnership eligible expanding embedded generate can connectivity convenient Using model save pay platform in new our revenue. This across eliminating the our the of brands of customers to data a and XG LTE we vehicles our card stations, or week XXXX touchscreen in-car they to need vehicle We marketplace, board. commerce Shell that year credit owners when introduced delivers a enabled pleased to up to device. Prime swipe offer also use and our at global technology, fuel mobile use wealth options digital their vehicles operations focus will more of experience with Amazon our X on our packages a important Key to His the extra customer, marketplaces, President by welcome an Wenig, finally, addition delivery, I'm the in eBay million board. in to a be and OnStar in-car CEO, extremely no than Amazon all to the U.S. And Devin at directly GM service

over like So it to turn now Chuck. to I'd

Charles K. Stevens

Mary. the Thanks, performance on-plan We reporting solid first delivered results. all with quarter in segments core profitable operating

headwinds and in As In the the line into what quarter. North timing billion the for versus It's diluted are The we with billion the launches. we solid ahead by results to we'd launches. margins. expected truck was X% primarily seasonality, generated more inventory reflects faced down trucks. in cash note that had in the driven expected, QX $X.X EPS the of driven and going EBIT billion $X.X all are X.X% in planned absence new posted $XX.X a revenue, QX launch our product in increased first full-size at $X.X of in we support coupled XXXX. traditionally full-size truck billion start year, $X.X pickup of adjusted, inventory to adjusted program retooling first when important QX and level quarter QX burn typical with some dealer of new our total, weak the first to the and free XXXX generated working of of results by as prepare adjusted in results These we quarter quarter. to EBIT facilities impact with downtime significant capital cash $X.XX build lower GEM and of flow the spending the pickup build capital America year-over-year, margins results enterprise in billion earnings, downtime

of which net Our incentives, first U.S. in quarter. grow to prices, the continued transaction are

ATPs almost quarter were of $XX,XXX higher $XXX the of first than Our XXXX. first quarter

expect driven continued new crossovers in year. the strong the later trucks by new performance our pricing our We and launch of

all Importantly, U.S. we the a XX%, adjusted sustain cost of to benefits industry, trucks year on our overall efficiency. full-size continued in of EBIT and expect full new primarily full-year the margin of continued strength launch a due new crossovers, focus from to

International. Moving to GM

Korea, more than driven a strong on labor China in results Cadillac, efficiencies. the conditional was the have weak growth improvement for America Overall, and combined agreement region cost other from said, is Korea reminder, to as dynamics GMI million of flat union, record and by EBIT richer GM in GMIO deliver the and by reductions landmark challenge, a former profitability sales As focused strengthen, Pricing performance realize in GM Baojun efficiencies, the current now the market. former which will plant to of a In million reporting pressure as strong that volume the offset XXXX. the in crossovers, offset Korea continues the segment quarter. to segment South labor $XXX in This market but expects and China was this cost from of reached continued mix remained to a Bank. is by and with South year-over-year, America Buick, Mary continues strength achievement. with in region. million $XXX income Development Korean Korean annual consisting to closure, adjusted a for through equity with Government, and $XXX we lead

expect as a new Development GM of capital investment Corp A to GM future few on Korean In medium-term. Korea in will of from XX% comments the and the total on $XXX efficiencies part million invested these to Bank. save segment. addition, savings, our and programs, for product And, we strong generate XX% the Financial return through agreement,

Financial full As quarter. future we the billion growth. billion posted million progress assets record earnings GM expected revenue to supporting grew $XX.X billion, $X.X Earning earnings $XX.X of towards and first record before almost adjusted $XXX of to continue in captive, tax

driven versus see for perspective, GM segment, expenses. by Financial For costs the quarterly XXXX. In full meaningful cadence year, from Corporate timing spending the $XXX we improvement expect a and lighter to a earnings QX, reflecting were in million

expect about as in the We year. a to for be $X.X including Corp spending $XXX the quarterly service cost XXXX, segment million continue for billion transportation to

allocation. cash capital to and Turning flow

mentioned factors driven truck a specific changeover, I weak billion, down to elevated as and of $X.X our typically was versus burn in billion. XXXX As was timing. This QX capital earlier, for down capital working by spending about downtime versus QX cash expected rate QX, run $X.X and

$X approximately balance of on which generate year, run are expectation performance our billion, We capital with cash our working for XXXX free on EBIT of and the a reduced dividend rate strong we basis. annual track China the spending rewind, will flow through payment capital

$XXX returned million we sale. quarter, in in million to the the in our through our $XXX Trust During through stock repurchases and $XXX shareholders VEBA participation dividends million

buybacks are in the the outlined to our of total share as and dependent XXXX flow the free second the the generation QX on we deliver at as the additional for outlook year, we be expectations cash the pace weighted was track half the would of calls with expect beginning With year. Korea be any for on restructuring I our Our of line such will regard our buybacks to year. and full to company throughout to guidance mentioned, year, on on cash We payments.

continued EBIT-adjusted regard We With we to generally core free through core raw in to did to commodities, to the in flow cost cash material similar be performance, largely XXXX. a what prices, quarter. and the first increase with automotive-adjusted we performance which business expect we expect in anticipate core in line mitigate

given is the from our place. impact We minimal, aluminum most rest The preparation relative and of Reiterating incremental expect steel the and new long-term contracts QX of sourced QX in be expect for on be be to in a strong that QX by supply earnings relative year, the of to is launch. additional the tariffs downtime driven domestically we weakness for in have and continue basis. weaker and cadence the truck will we QX to

quarter as As in is year equity performance XXXX, our year-over-year growth American mentioned, four while done South our GM challenging GMI. launch few later significant for meaningful first of move To markets China, core in expected have Financial a now all more the in and truck and expect months of team will it support concludes in plan is up, is environment as least sum billion operating on as at at profit the with portion the the on question-and-answer our to results. call. we reporting profitable in in income improvement The focused commitments $X in full-size well We'll just segments and came opening as XXXX. growth meeting ago, And than earnings years. That we just comments. the a entire past the the

Operator

Merrill first comes John of from America Bank question Lynch. of Your the Murphy line with

John Murphy

Good morning, everybody.

almost Just list. a is these Europe, there must first else that the ticking what something because list next and your in seem be now just issues on through be on Korea, you you're address, question, your GM through to Korea, to things after curious next

things and mobility, where about as segments. might America, segments thinking right far we'll if same might curious the trucks, we're as include be or it's South not about Just them GM a to thinking the get now and point GM Cadillac, way if we Financial as ever

Mary Teresa Barra

Yeah.

at First, South down have are we America. America an really it leadership have we we very starts market opportunity exceptionally look in you fact the positions and look with are of point the number our took that seeing as vehicles, XX%, the and with in really GEM America. to grow. our franchise South market when have position, strongly selling then, we'll now say well-positioned that would set product South Onix we that share And break-even we When in coming new we at strong think I us product that you one

to we going That's we're that country. we'll think very there. resources move a because of have so we we contribute supply bottom General see somewhere forward. a Korea, about is important say, the engineering It's as of strength in the talked talented franchise was next. of and very we've and not line Motors the important there and would the that's I past, as base demonstrate a that So, because

close couple track made the well. of other feedback investing So very have is truck vehicles. so optimistic but but launch labor and we've functionality this it you looked historical about is a agreement have the – our seeing agreement strong sure truck I'm I if at And work the to on on the say And we closing, are positions The we well. customer at really that really would where ratified, and that. crossovers, you is customer trucks. full-size the we've are is to very with have we're is as across success going for very been there. not we really nicely there's countries segments as in The look looked both exit, improve and to The of then, to vehicles, to do, if features profitability, Sierra family getting building we and, Silverado those and focused improvements the exceptionally our

So we're very excited about that.

allows perspective there then are So, that's leveraging made crossovers, because in from and investment the and but car U.S. segments and XXXX are cars continue a to invest, in offerings trucks they full-size to marketplace the strong and to XXXX are opportunity. us an although have several that large shrinking, in we still strong in investments not

So we've with products we I continuing now improve there say, major strengthen areas the and win. would the done to and address really right profitability to it's need with that going just Korea, the to and

now we report and demonstrate segment we to how going transparency appropriate going forward. potential look to right the what's the something have that's forward, relates segment we always might the it is going think reporting have the we provide evaluate As that growth that to right to see and I and

John Murphy

requirements over partner or And question changes for just SAIC. had in then, you've mean Got potential structure strong around strong China. I a JV a pretty ownership some there, you. helpful. performance in second That's with

really you Just curious that advantage JV if make could as an give you not otherwise about market partners over own? these would of do and a how sort this, get stand-alone might do really wholly-owned you change? you we that think company have Or operate in the your change the on there, you

Mary Teresa Barra

for We XX been outstanding than in think an partner together years. we working We've more SAIC. have

it. a advantage. overall customer in perspective, we've we think that think partner then we in understands world. a that reinforces efficiencies and insights to been around policy, well, also been position at drive So leadership allows having the have that that is especially We've us And able I vehicles if you able China, if to leverage deep the whether to you the sharing government perspective, an what look regulatory environment, development, look from as that by accomplish electric

strongly has shareholders. what's and right look we'll in we continue believe best our the But, interest tremendous will JV at that to So now, benefit continue to. the provided of

John Murphy

Okay. just quick lastly raws. real on And then,

You rest purview of like absorbing, say, were I'm to share or that complex as be of or and steel the an hold of raws or it better out bit risk, I the suppliers. were were or a sort sort seems mat we of more it's of directly? I rise, a complex sharing key you a rest prior of – with larger the served the of opportunity might might or that understandable the want you curious, raw should is suppliers. increase mean, the purview potentially some to just metals, there value see decrease the of than the to downturn, chain but you on to aluminum as you of little be portion component the helped the lot to

changes there's across the Just sharing chain? value that in thought risk or that any curious there afoot if might be

Charles K. Stevens

let couple answer of question. A John, Yeah. dimension. that me

exposed that of of that is $X on billion basis. buy we fluctuations year indexed, of or so. roughly billion which raw one-third $X $XX to or an a about First, one-third commodities billion we're means in on to material annual about Only

the the impact to $XXX on contract. lag million movement do that. a long-term Obviously, Ultimately, rest there's the associated about are of commodities million. commodities in in moves to subject can commodities. negotiation, near-term math, You talking I'm us bought will just with always but be X% $XXX The they'll

we're like feel we So there. reasonably shape good in

opportunities. with strategic we cost opportunities the as productivity, we sharing number been at last suppliers engaging engage on suppliers, the chain, and with them we've Second, looking a across for savings over efficiency, or cost engage basis value with entire years. of And

we will So at commodities. look

at look foreign will We exchange.

dollars, look and of We'll A driving years of at and part used on if first that our big and I at savings, savings seen of benefit look pretty And the savings, for line headwinds there commodities. at year. again, track that and we over you which technical target, in We headwinds successful efficiency to the do quarter. as $X.X any the a is offset generated hundred first were footprint been really technical of last commercial to will through say opportunities. opportunities mitigate And the to number would million which the and the technical for commercial with in we've cost of have of look couple quarter, we it some that $X.X we've commodity chunk productivity. billion year-over-year, billion bottom we've we're

So question. your answers if I know that don't

you've look it think entire across chain. I the at holistically value got to

John Murphy

much. helpful. very you Thank That's very

Charles K. Stevens

Yes.

Operator

Brinkman line question comes next JPMorgan. Your Ryan from of the with

Ryan Brinkman

questions. for Hi. taking my morning. Good Thanks

Mary Teresa Barra

Sure.

Ryan Brinkman

With credit been have guys some years trucks, of nine versus announced loss-making that brand depending and crossovers, of that you on yesterday very count. lot from all rightly under-earning offers like a It line-up. I competitors respect. You the in Chevrolet drop American would the they geographies, but in think cars relative maybe to this six about have looks said, two North cars utilities, and proactive how your exiting passenger been Ford passenger recent given or

on have et you Kansas or also that I now (XX:XX) you seem several Of Buick, just but forget, plants, one think Township shift, et at more cetera, or passenger I what car. have Lordstown or mostly with including and course, entirely Fairfax City, focused Orion cetera,

offerings, tell by greater complexity. margin your to number that you seem line-up GM, of improve is greater passenger it even greater at me So car there maybe would rationalizing an opportunity given

what what such to expect see period of your time are investors on and thoughts this could So, over opportunity changes?

Mary Teresa Barra

focused architectures look with think as proving you I compact, new in fairly that are segments. styling offerings before, want the new on good as already mid-size well is – Well, when we customers and forward I in very launched and at and have mentioned in these XXXX efficient XXXX, platform features minor coming to that changes we a go where that very and

of that. as we're are little don't opportunity think made the an going segments, significant investment, that move to there's no we I And forward. mentioned as because I benefit need we've So capital still to before, enough see to the think deploy the we

opportunity. we it an So see as

customer always looking we sure possible. are for We that then make efficiently do we're how as drive focused and as

car each over business of our of the make We all to that areas we're have last that efficiencies sure support worked on lines the across driving year those.

to is think I at a are then, still that GEM what is to you're do see the although family be yeah, So, play the around you globe, products declining, that, we there us segment next look also that will efficiently and has of America launch a as the opportunity. going but Buick, is going very car portfolio, and family well car to you also still Chevrolet, support a China market only has strong from that. then South starting look very not that GEM at significant from year And as

We're we we're you as efficiencies for well-positioned in cars. change and Lordstown. marketplace, the looking will made responsive saw the be at I with to that think always shift

Charles K. Stevens

you and to Africa, we're largely market, mentioned, America on and we've over could of did by specifically, a years at, back to Europe, passenger breaking look and the last as Mary we add to point you I just car we market, the lot car decisions Chevrolet take Ryan, that, reduced I largely But that markets, the upfront, which And think seem the a U.S. in tough some mentioned South India, think the a we passenger reasonably the XX%. so. with step comments, questions rightfully and should South were what sale, Mary's we the Korea; the focused made. of well-positioned it investments if made tackling Russia, to actions of numbers be just and Opel-Vauxhall And

All addressed both those a passenger architectures crossovers. GM and passenger that number of with will mentioned, we're Mary then, architecture a car launch, profitable cars issues. as profitability of And across legacy inherent the replacing go with

systematic think through XXXX. it's frankly, very, been I years. results XXX by as very grown over last since margins line, I of seeing the So number And you're basis the bottom flow points the we've think over

Ryan Brinkman

what from had out Very to helpful. separately better that you any GM maybe operations? do a remainder We America the doing China of just comprise fantastic, any continuing South I sort Thanks. track for imagine year? And you your then, but the of income, how different used directionally international break and you geographies your expected. see is to but me, we lastly International update losses you're consolidated directionally to speak I what South performance sort longer, from you mean, profits equity you're if International? like performance were you GM quite I if know on better of expecting I than but of your could bit could the call can to don't the than America, the And there there. speak reducing peers, were to

Charles K. Stevens

to say, given Korea, industry but basis, to not to engaged in and frankly, clearly this piece to about surprise pulled Yeah. improve concerns overall segment. year-over-year consolidated We long-term. plant is and we're performance equity in with significantly America. to What be domestic again, and one was our continuing would and anybody I else going the a South in up the market challenges closure dynamics had The make a the the today, in progress segment, everything there earlier are in continues probably we of back whether I some that are I'd continue we improve income China said and we on and say this. that

about would So stronger China kind of way That's would think kind puts America, takes the equity income. weaker of I South it. be the and Korea,

Ryan Brinkman

Got it. on quarter. the Thanks. Congrats

Charles K. Stevens

Thanks.

Mary Teresa Barra

Thanks.

Operator

Your next with Brian question Barclays. the line from comes of Johnson

Brian A. Johnson

Good Yes. morning.

Mary Teresa Barra

Morning.

Charles K. Stevens

Hi.

Brian A. Johnson

your in been It's margins your trucks had no We've you cars. it profit percentage Crossover about declining margin. because terms talked than much secret in have higher that or put of crossovers the XX-K cars. of its account

Your they're aging crossovers re-launching. but were

So, questions. I of two guess, kind

in be kind you as improvement with As to go, all? Are add more at towards seeing capacity, heard the XXXX roll what Traverse, competitors profitability three second, and, then, Fiat, into crossovers, going how then, of the older to out offerings, Equinox competition that course, of from we of in model about truck this think the moves XXXX we to as you crossover year? of truck Chrysler, one Jeep other that course, maintaining we profitability of you that both platforms do as more and we your plants, due in of knew their the face kind launches new crossover the going And new with Ford big around crossover timeframe?

Charles K. Stevens

Yeah.

question, I think, broad-based a pretty Brian.

headwind, about specifically have America, were past, that was very we billion there think in roughly First, on margins the when about in going track we going to we a improved to million said North related of $X.X the the reduced truck crossovers. XXXX, speaking, on we percent XX% very fill the in and profitability the to about be that. And said launch very, gap with $XXX We much production. we're

erosion of the the the clearly, And seeing the our crossovers profit of old XXXX on results full-year was kind that's largely crossover. driven So, and sell-down benefit. we're on

I much that So very track. on say very, would

us. and front Looking forward, center critical and improvement profitability is with continued and crossover clearly,

we we'll is driven in will XTX, going this two which continue to that's improvement, lines the by what excellence. talking crossovers see these cars performance level we passenger entries largely new enterprise launch Cadillac. we to And on aggregate is are in on Later new that and the actions to at specific basis at crossovers. of One continue and presence participating. the for car launch but to And continue on And and to a So going I look a got operational instance, the by think focused crossovers. very you're with lot very, And look dynamics. to weekly our how drive earlier, at from very overall we've were I sponsored traction do about a that also with do we'll standpoint. cost we continue drive think of in be senior not we'll organization leader a year, can segments we're profitability

continuing So What that with new in hard have. that we going to both the is run in us entries to are it's and front be crossovers competitive. of on stay going to real lost efficiency do more to entries, out not drive we're that, cost

Brian A. Johnson

that, when of and And we we're revenue to some ex-China Asia-Pacific, of will lower ex-China, America in Okay. activities in of think that off or places terms we do as just in especially a restructuring South that margins a in be specific of kind normalized well about international as base? follow-up macro, covering say like these from

Charles K. Stevens

Yeah. America Back South there the reported through said were as on a margins product, track. we launched we EBIT and separately, path break-even on GEM largely in the and day say we worked mid-single-digit to I'd when we the

overall goes savings. somehow through. Korea we the getting move think year of We basis. message start the it'll in and to right the on $X.X I big a step that towards generate line $X.X would the billion landed That's the rest through as improving segment go-forward which That's deal through just year. bottom accrue a QX isn't to GMI of a a billion

two between things. those So,

we're objective be continuing ex-China, we talked in then still a and XXXX, in GMI XXXX there's GMI profitability the much profitable And in think wanted we and very that before XXXX uplift to and segment whole and that driving through what XXXX. is I to. our our meaningful

Brian A. Johnson

Okay. Thank you.

Charles K. Stevens

Yes.

Operator

question Stanley. comes of line Your Adam Morgan with the Jonas next from

Adam Michael Jonas

Thanks, everybody.

questions. two Just

and federal in you the policy tax question. town economic asking increase related. would infrastructure? Mary, the I've U.S. is CEOs support first across the The if went the been rebuilding an proceeds same U.S. our gasoline to

Mary Teresa Barra

of cost be at at the at Well, I we there's an ownership. EV whether quickly. that it's then Adam, use, to occur answer. support and where than think time and in would changes we their in where the more and multiple for changes infrastructure And But in multiple the focus we're sure fund way little What on of and their all, to we over affordability and beta substantially that it's needs improved make the how do need look We the agreement solution I of in first overall we're are say I going think full have think do that a a infrastructure infrastructure complicated take EV road it's in perspective and also to headed charging, that is, we're we that example, the sure right a looking with that solutions tax. to whether comprehend ways are at customer I addressed a yes-no is that. look or mobility, transportation to from we gas type making general

holistically longer-term. at that government So solution. part the together. much very be of this We of part I we need at and to a look a we more much need think it, levels municipalities tax much to be can and want come the over to A all think gas but

Adam Michael Jonas

that. Appreciate Okay.

GM Just a follow-up, and question Amazon. last Mary, on

I So Prime day have I with from million yesterday agreement mean, XXX just the subs. before fascinating. they or Amazon find

on customers cars million and logistics. this Amazon them on is point XXX spend round for the about and year road, nice more them have can fulfillment, billion shipping their solve and really you or You It's in major less. $XX a help pain going to numbers.

question, to parts this Mary. two So,

can on just is lot than car, this the be through be experience, work? can Like, the get delivery, a GM this for right, of the putting not iceberg is paid the because the do GM's of get then revenue? delivery. you Mary? And this, First, could the in I you're does Can per customer more junk GM on dollars? and their content walk paid paid us trunk, just that you just you billions logistics work with Amazon mean, ways all tip per because per get does saving how doing How Amazon second Amazon month? GM

Mary Teresa Barra

sizing, paid. the will a but to on it's we Well, just say into details I going use I'm not it's a model – go of how based of get kind of the

one first it I'd junk that customer focused I they if is agree. of I know trunk don't think So, I because in want. thing all, being (XX:XX) call the

Adam Michael Jonas

Packages.

Mary Teresa Barra

a I the no think et unlocking and we cetera, are to when base of in give something that huge we going them the – the there, of, have a I locked we door just, value is of not it's this connected. one, them intended, But peace but value the customer mind at that get think convenience knowing being the dropped pun having from that their being security vehicles vehicle, of that, are

opportunity And and as I think do go with there's we So working that. forward I aggressively with Amazon to I more we're think others. much agree you,

I have a good profitability with generate benefits for it, call mile. and you on see efficient revenue a we way and forward, get, last to It provides as customers. an we'll our relationship opportunity Motors We it's more for as and it Amazon to that General definitely move that think, this Amazon

Adam Michael Jonas

in an app, So, it that would option because how doing an as appropriate Okay. GM initiatives think Well, a OEMs announced, poor everybody. some Thanks, at I compensated? any how the – a a just like, you does that but on make are to feedback revenue pretty put you other it's job transparency difference. vehicle, these gives level, get a GM big are explaining press just when being on that just micro Amazon of

Mary Teresa Barra

point Sure. Hey, that. Adam, just one on

Adam Michael Jonas

Yeah.

Mary Teresa Barra

of Amazon. with as So, said, type opportunity a kind it per-transaction I is a of

to right vehicle company's of the another at if So Marketplace, time I the ability very as also discuss that product and in just on getting paid only – positioned not at see is more impressions safely think is we'll opportunity demand. the we're on and and look you forward. go we which But the that appropriately get

as impressions as transactions. So well it's

more. as share this meaningful. to going think we So, I will grows, be And it's

Adam Michael Jonas

Mary. you, Thank

Operator

of Deutsche comes next the Rod Bank. Your Lache question from with line

Rod Lache

everybody. Good morning,

Charles K. Stevens

Hey, Rod.

Rod Lache

I How the had management talk what can remind to everyone's executed? to One, sounds is us faster just you about little could done of you exactly bit couple there? of from be you a things Cadillac? see like a going questions. just And And or wanted that comments it differently. that changes your are targets

Mary Teresa Barra

the from is appreciate right Cadillac Rod, So, a not And turn this perspective. question. strategy a

out a a to coming grow a vehicle, have very on having opportunity average We XTX, We new a six huge months. product every think strong starting product the cadence, see with new we luxury our for opportunity a as we're pursuing our how grow believe to well huge electric as profitability. longer-term when volume, autonomous. you is vehicles I redefine aggressively really look there at Cadillac

And markets, so this and in the that sure a in the and we're as many then huge markets are U.S., was the future to opportunity setting and China in today executing really we acceleration also really have the that strategy participate we other looking for both make key that an in.

not So right a turn. or this is left

still stay will move it's to We in this a accelerate. and with New York team

Rod Lache

Okay.

Charles K. Stevens

that China, by wanted million objectives, in the as Mary units north path by to largely and to, that's Rod, mentioned. back include we about goes to and U.S. talked improve something largely relative we think kind roughly And globally our that on this be foundation billion. the X.X the kind so And double of $X executing to by sales that Cadillac of would and profitability operations would before consolidated And XXXX, of we're driven the about the that XXXX-ish to timeframe,

Rod Lache

billion? on path $X improvement Okay. you're of And currently, that that

Charles K. Stevens

portfolio building we're there. accelerate that. and to to filling certainly going us get work the product we're up the foundation to Obviously, hard very Well,

Rod Lache

Okay.

these In positive, help upside structural other frame up we about switching product price as now side should and very how us and you the but and think should thinking costs be launches just pace of about be trucks? from of the Just contribution can the auto gears. North it. American mix pick particularly business, Presumably, the you

Charles K. Stevens

What's the of your timeframe, balance year? the

Rod Lache

Yeah.

extent then all do look with And you or content give us how about, structural we and in, the should flat out are they this up? things? coming we contribution be sense thinking the be of As of should side can this, we next, year to into thinking costs cost a the go

Charles K. Stevens

say a and launch this at let's Yeah. of following the I off and level. kind macro X% keep would reasonably

generated first X% the we in quarter. Now

We and about, increased expect that first as to full-year you the drive mix, margins production at utilities is the versus quarter. of full-size improvements trucks talked going and XX%. What's with

in trucks. Rest quarter. of will total improve cabs. mix Crew I pickup significantly that's perhaps had mix production think, first of and that's of our significant We truck year, cabs. interestingly a also XX% going of as crew profitability to driver crew transparent, downtime in and cab we not be closer the was XX% the of kind to of in

material cost expect performance to largely We offset commodity.

of run efficiency of be basis as cycle through the strokes an to we to is kind largely for rest costs, flat. cost and relatively rate year would organization. in So, drive costs the launch factor we And that expect the a going on to continue broad manufacturing see in That's improvement fixed XXXX.

obviously, D&A, going of we increases we've endeavor As as, so speaking, before, associated been in would cycle next I time we and long cost and timing, is the drive to I this to increased And marketing but expense increased new year see D&A. talked to as expect expense would it some the through future, broadly of to also kind will fixed there to expect That's and think is And down. two the talking in This that will franchise, related we going to for truck about is think about investment this the kind say largely up. it. expected launches, we expect a go year costs a engineering as fixed the these to as in be XXXX. marketing One carry we support go-forward about we on launch. increase be with launch beyond truck efficiency, to expense I'd to we through crossover see that cycle basis, these. some come with

going would sure not on to with will I'm or question, performance cost clearly. I'm I flat material Price be is offset Rod, offsetting commodities. answering So majors say relatively But the at fixed near- to inch medium-term. than offset going majors. get the are in material bit a I least costs think And more on We'll mix improvement. little then some to up

Rod Lache

That's on looking progress quick the are color for? on we milestones What And any lastly, that be should perfect. AV just development? Great.

Mary Teresa Barra

track on a so Well, we hitting environment are for in launching milestones. the still in XXXX, ride-sharing

that I think in to the we did with important that (XX:XX) filing NISSA was process. do

vehicles, the to build on areas, of et knowing so, we're where cetera. track the going all we're And key

we have think we I year, safety that to it when other the last of look by aspects have don't about gated in But any make under we of vehicle proceed the that the of I we that that deep we'll have right have safety and have the when to redundancy vehicle safety. overall. AV, one and the the milestones for it we through have and fact be talked you in vehicle we redundancies. talked that we we the to So or than the modified gone changed specific also make right work I'll the past AV, shows ramp In itself, sure the subsystems shared integration, roof, extent all we we're we've about when at lengths the doing say that the sure XX% in and of great deep this brain

gate will but us, we're safety track. So, on

Rod Lache

Thanks that. Great. for

Operator

next of line comes question Goldman from Your David the Tamberrino with Sachs.

David Tamberrino

the as a cars to AV I-PACE testing electric have? of quarter, that and bit know vehicle. us the during announcement of are think you update do employee-only How York. Great. level and and comment, what well off a electric Waymo Building you little about as maybe more there potential from then, the service just of upscale then you Hi. offerings now ride-share there, the for going that you. let can in an potential Thank to your Mary, bulk competition New have was your Chrysler And relative is mapping Pacifica that your

Mary Teresa Barra

do perspective, done going to working that your us area the, we state perspective a Well, of that. first, city enable with regulatory from say, have significant to be to mapping and I'll from we're and

B-size drive, roads, San people both the actual I in say anything lot working perfect environment can't really from on Bolt I when parallel. on that perspective I going how functionality, quite And have parallel. also from and that in at EV, have both then, its a a the ride-sharing cetera, that doing it's the regulatory in would a it's the for work don't EV. of is the We be et beyond we're sizing, It's comment for a look streets, environment vehicle of but but I that But different strategy. to in about further segment. Waymo announce you we'll what spacious Francisco, Bolt think focus

everything we think make has also redundancy the we have the only and one is aggressively working that is to the can doing are and would product roof person that I and under the again I market So deep we say AV integration sure safely. right in deliver

David Tamberrino

then one And for Chuck. question you, Understood.

from flow around of the net Where a you downtime. can of you messy cash might And hit working about level your some perspective billion. this little net and capital sitting think was cash year right on Today, GM China two it's billion, going more a $XX balance, be free think XQ, amount us the billion. year? $XX It think sounds bit kind of net around the of when XQ then, of the dividend working business? with to cash as On the recovery I you $X bit incremental a is timing color do little for give XQ cash, and a is capital the or ago, like

Charles K. Stevens

Yeah.

to cadence, on going rewind. clearly Speaking the we're

be higher to little cash. factors. is a driven we're significant at level When it's start balance four me amount to year, going three or the about generation, of you by One going of think a Let based EBIT cash first. bit generate major

range the dividend. EBITDA think the billion in China plus. of $XX So, about Number get we'll two,

in quarter. the kind versus of tailwind So, first that's going to a be the cash

I of pensions of go-forward it downtime, And of $XX, spending a to expect path debt have rate be some at a just $XX side have strong underfunded it's about second get kind from rate. the our down the and time a flow when lower $XX from down. billion versus $X external we get on to tendency year like perspective debt first And to there. cash Third, Within is up a to to step working and to flow strong a free run $XX on debt $XX just you framework, rate drive of run basis liquidity pretty billion. on ended about. pretty to that CapEx cash see basis capital would to on continue plus to quarter not and the the billion as continue as perspective. be typically then the over to over going and Clearly, talked debt. yourself big I from a run QX, at pensions we generation billion last QX we'd those purposefully about the I billion capital look expect a talked I important significant be would talked that easy go-forward and of to we we've drivers, with rewind. be a working quarter We're allocation going the a cadence talk perspective, to been and Obviously, that when about run rate

that, That's and billion say it, aside billion framework cash the in allocation code the something and and about our net $X pension so or to feels piece cash, setting would somewhere So capital within that somewhere of handle of could the of zip in balance right, target $XX we absorb sheet I billion $XX our billion $XX debt. directionally.

David Tamberrino

Thank Great. the for taking you questions.

Charles K. Stevens

Yes.

Operator

from line with comes the question next Itay of Citi. Michaeli Your the

Itay Michaeli

Great. Good morning. you. Thank

Mary Teresa Barra

Good morning.

Itay Michaeli

Morning.

one strategic and financial question. one have Just

quarter? Chuck, around the first broadly of acceleration just clarify XXXX, feeling prior macro savings, for XXXX given financial, XXXX? in Korea further you the developments the earnings you in And more much some can then, are how how hits On the around just XXXX, the versus outlook in

Charles K. Stevens

second start don't the a count perspective head say related Gunsan the a that got billion, the about of the benefit the but of primarily to of I rate closure some of the XXXX. half, the from Yeah. some on from half agreement start want but it we related of to to year, the opportunities and the that, significant half to would those I the be run is will about think other accrue Again, reductions. the union. labor get specifics to through when second closure $X.X the of a related will with into in is half of agreements perspective, agreement, we'll some get and And that Gunsan other portion in to Korea plant a labor the I of lot

year. in be is than year and impact least XXXX So this, versus of to the going see second full-year XXXX. has our nothing at to that then my look next going XXXX, perspective the mean the we're half and changed and from I I Relative step it to view stronger back at

We least be which running, will light of significant going be benefit and full-size launch, is us. the be the significant for portion they'll at truck through and a up to a duties,

year. market that's the We will customer primarily to in I talking back by continues through also growth, Financial, factored China that's OnStar. but improvement I tailwind. back when a if and Korea XXXX. thinking to deal, adjacency that we've really wasn't were GM our And year have another care of that and China $X.X had in into the that after-sales really Again, circle about this encouraged potential a start think perform, billion we We're

in example. Brazil, as about expect think going back an within I further opportunity. discussion So to that's recovery see GMI, another the significant we And opportunities we had to

So was mean changed days, is environment that's it it's and unsettled early than the we're anything still a don't knows, ago. our months I April, there's view. now I more four little bit But who think

Itay Michaeli

partnerships there, course, predicament that potentially what's relative co-chair market the for you expected you the as other network going to or to the as very network. Mary And updated for partners, going about partnership? been think Any to is thinking on unfortunate AV to building alone then autonomous helpful, your whether own up, of strategic of going a around maybe then changes them Chuck. maybe one the GM year? to And back of or with with bring ready and thinking thing Uber side, That's even next pursue get Cruise XXXX and kind the on perhaps agreement for launch

Mary Teresa Barra

announce Yes. here. have don't anything I to specific

Cruise As one app to track are the we more, we opportunities. that on we working own own, we so on we are launch to with with have. much also said, still positioned partner with very our to to or able be those But on our open to partner go are and and

as between So, is and that still forward now then. we move opportunity

Itay Michaeli

very Thanks much. so helpful. That's Great.

Mary Teresa Barra

Thanks.

Operator

You Emmanuel comes next the with of question Guggenheim. line from Rosner

Emmanuel Rosner

morning. Good Hi.

Charles K. Stevens

Emmanuel. Hi,

Mary Teresa Barra

Good morning.

Emmanuel Rosner

Just on China. follow-up one

with quite up So the seem not but positive to earnings in flat then quarter stabilizing. a there margins nice and was be, surprise they're

forward? it sort view as So how do potentially in is that you that the we drove sustainable? and that going something about What quarter of think

Charles K. Stevens

billion. if comments, to think said, I my listened least I Well, $X you closely at

feel that be what upside guided like we So, a would signal there's on had before. to that some we

to X% of moderated pricing what said, think pricing kind that get X% in market cadence. launches as first so launch a in luxury that of see a perform rest momentum the very headwind got to mindful strong our been more to that to and some communicated we've China run moderated and to the we've the pretty could Dan China and month and continues the expected, opposed for quarter, very products that With watchful was was got or QX, QX. in quarter. expectations bit the little got market's feels facing, are go we factors, well. I as and price got QX X% in to in first good. drove out. a through The Baojun to us moderate, and headwind The play One, I it very developing how performing first roughly Mary The to couple of Two, we well. Cadillac quarter the we've X.X%, new this. it have we've ago. be very, dilute continues that of some obviously in we of a and year in rate the that was continue are as there good

stay very dynamic like we that say continue to I'd cost that margin years, to is obviously, we bit a years Emmanuel. and, the three about, So four have we're you very, stabilize which little focused last talked or on more helping efficiencies bullish

Emmanuel Rosner

with seen the November, invited sort And San have like guess Francisco exponential was confidence Okay. the roll-outs. autonomous view, I'm terms a just in of fully sort That's year of sort the you in like kindly a cars but weren't you ready when deal from of impressive quite what an of point gives technology XXXX of situations follow-up different you cases. display us on cars in I the of curious, helpful. timeline? and last then, ability improvement the the in to some in

Mary Teresa Barra

opportunity that or opportunity would company some development understanding those really this the let had think has were of vehicles That very important, I in in the I so that you I say the kind itself time ever think somebody because early, had was it's was opportunity historic a to that first vehicle which experience.

a well- to continue daily We a happening path. is on improvements very development software. There as changes have basis, develop we almost are defined and the that

to So that and able need there's what well-defined a to launch track be path. on we XXXX are of accomplish we to in

Emmanuel Rosner

Got it. much. Thank you very

Operator

Your RBC Spak with Markets. Capital the next Joseph comes of question from line

Joseph Spak

vehicles going know Mary, XXXX. talked us that's how expect electrification I that with in look the just by by your about to wondering global you the to transfer a little also like, of be and to a license strategy, put remind within to or what if of I Thanks. you've that XX of think timeframe on you bit China was And it maybe, I terms sales you it's works percent JV? could how electric. and partners finer do technology point

Mary Teresa Barra

important those. start some will we last consider There's question. of very certain we perspective the that special some IP General take me are been the Motors parts to that developed and There are how from we Let technologies General care have with There co-develop. that manage and are that things Motors. licensed vehicles by a we

some closely working in a look. cases, So more cases, And it's really we some suppliers; others. combination with Chinese as in

is efficiently and the a electric answer it's is vehicles. one able thought of very think ownership simple a but there, where not to to I the through IP develop it's be So the where synergy then well

but we'll at to that will believe launching volume Two driving specific be next the significant we have part vehicles is will grow. We China of actually XX by I'm opportunity said least out that, that not marketplace. in on and so have going into that it think, XXXX. be We very what's of put where environment to to in the markets, well especially that because and of dependent remain we're some price affordable, be and a will track, regulatory we see and deliver have environment. range-appropriate our development we able the very stated see desirable year. because going we the the numbers be vehicles other that But fuel I is is regulatory to on going

Joseph Spak

that expect which I side, I then, below rest the maybe the think Chuck, you clarification. a on just the slightly Okay. rate $X said, really think of indication. I run $XXX still million quarter a billion And to Corporate the over thought prior year, would was the bring you just a

So, was step-up get $X that the a rest to billion still change the that or there of over a to year actually number? is

Charles K. Stevens

$XXX put purposes, if for $X.X say, be as would in $X expected think spend the I billion I which to your was we would of average, year. spending, a Corporate model million billion a quarter, service. you'll on be close I transportation for you for to just reasonably modeling that, trying imply

of QX, some benefit staff, lot mark-to-market. of the we of and timing, saw derivative certainly of some security corporate expectations legal, of re-timing some a that in there's was that kind and So some

to of year. $X that like year. for again, I number some think, We as the about work re-timings, But modeling for towards billion will certainly feels savings the and right go those through be sticky, we purposes, the getting

Joseph Spak

Okay. Thanks.

Operator

line Your UBS. with of the Langan question final from Colin comes

Colin Langan

taking for Thanks great. my Oh, question.

commodities that You presentation mentioned increased. have in the

think the past said it's in I is million. just $XXX there? now, sort What that you impact you're seeing any of the color

Charles K. Stevens

Yeah.

look and moving obviously this is I back, a issue. As

the $XXX north we And at obviously, number offset not four insignificant or thought. headwinds speaking. confident basis started on thought and be for would billion, track maybe and continue able but some headwinds during January a say, change now, right year-over-year it little a no closer the or was we you we've we be our commodity, of got guidance million, reasonably million mitigate work $XXX exchange, somewhere a when I commodity developed I Hence, back I that look three being it of it did we'll be and years, year, putting of somewhere to year well. as about in last year. that $XXX headwind record that if have to we're overall So to think annual to would was bit these in do the And million what to if that, that. or so whether the versus updated even on the expectations we in would earnings, able we roughly a the $X.X maybe

Colin Langan

is the that Got a seeing more actually that start on hit and Is expected color platform, when savings? or help half? any actually of it. the second when the And we launch XXXX GEM that to

Mary Teresa Barra

latter Launching in XXXX, the part. I think

so... And

Charles K. Stevens

Starts XXXX, that million both would XXXX. architecture, say Yeah. I and this the is benefit of in full launch in the South But platform, And early you'll entries and and off there'll be the of a a latter America. different see big China vehicles, rolling by of of latter this X of of a part number part kind XXXX, XXXX.

Colin Langan

you've sort we Got the of said thinking? is still XX,XXX in track? production, that in expected just Is lastly, it. think be should number decline pickup the on the past still I And units is that

Charles K. Stevens

to the to was KX, play just that at the and first when going gap. was going to year. obviously of it downtime current as downtime fill about we and generation related in the play were go XXX,XXX half launched we Largely, the quarter looking to of (X:XX:XX) the the That's XXX,XXX out. truck, units, We the rest the through Yeah. out

consistent I what we with think that's about talked generally on before. line or

Colin Langan

All right. Thank you Okay. very much.

Charles K. Stevens

Yes.

Operator

I'd the for you. Thank Barra call comments. Mary turn like her over closing to now to

Mary Teresa Barra

while I'm results been our future. Thank commitments able with business, the the they've of achieve positioning this our to I'm to the around what and of for our record meeting track proud very proud team integrity. also always for of you. we're see for approach globe we you disciplined hope run team's today. ourselves the And participating and to focused that I demonstrate how continue thanks everybody,

in adjacencies there, our our going continue if plan, you quarter. achieve we're a we're about continue we're look to So them and what able at and going to this continue plan. the and execute built the and build seeing crossovers we results what to strong do We've lot to franchises areas. first to to the in or strengthen and in core have And talked we've been transformative with them

products well our underway We are about. and XXXX. the this that in start of so then to for well full-size second and importantly enthused roll They're will that through year truck and we're family building part XXXX very of very

vehicle the with of we the an hard have that leverage as and appropriate-ranged electric well very utilizing worked and to significant the profitability improvements in in data, then to of didn't path companies. and that we where And South desirable, made a to, all-EV strong the transformative right autonomous really GMI, the we connectivity and some customers tough as businesses have franchise will generate as have largely to a and see decisions and We that America exiting in more in comparing revenue we in believe first again, with in well attainable vehicle the in to the do we look seeing and is for as in well as monetize much future accretive. the adjacencies other the the growth profitable, we seeing business number services opportunities at quarter. CCA. OnStar positioned creating both as it In services we're vehicles built plan that area, customers ability strong and, our of on to have on way China a like opportunities growth We OnStar, and are the have that's generate GMF we deliver return. is

when a we're going. we're we've where we at look pleased company, what So, I'm done, where at as very with

business strengthen to value grow opportunities it and, our while significant that, there's think I deliver to doing the and shareholders.

participating and bye. much good thank very you So, say for we'll

Operator

thank ask conclude your for for Ladies the and call that We line. gentlemen, your you you that and does disconnect participation today. conference please

General Motors (GM) 26 Apr 182018 Q1 Earnings call transcript