General Motors (GM) 25 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

Michael Heifler	General Motors Co.
Mary Teresa Barra	General Motors Co.
Charles K. Stevens	General Motors Co.
John Murphy	Bank of America Merrill Lynch
Joseph Spak	RBC Capital Markets LLC
Ryan Brinkman	JPMorgan Securities LLC
Itay Michaeli	Citigroup Global Markets, Inc.
Emmanuel Rosner	Guggenheim Securities LLC
David Tamberrino	Goldman Sachs & Co. LLC
Adam Michael Jonas	Morgan Stanley & Co. LLC
Brian A. Johnson	Barclays Capital, Inc.
Colin Langan	UBS Securities LLC

Call transcript

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Operator

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

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

As a reminder, this conference call is being recorded Wednesday, July 25, 2018. to Relations. conference like Director to now Investor of would turn over the Mike, I

Michael Heifler

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

press materials available call Our the Relations GM are was morning on issued and release conference Investor the website. this

in this color chart broadcasting the President key have remarks; and the CFO. this also Included GM's in are Stevens, morning, GM's we notes via webcast. Mary Executive provide brief by in followed Chairman will from morning, each order the results. This We and Vice Chuck call opening chart on provide the pages set to published Barra, takeaways some CEO,

In we Tom today your President incoming the in Services answering We Finance have of and also assist CFO; room and Timko, questions will then open community. line to questions, the Suryadevara, Vice President and for and Corporate Officer. Vice Vice Dhivya Executive Chief President Accounting Business analyst from Global the

we chart now to on to of language. governed will the this page direct call the the of first I forward-looking the your attention by would Mary Before The call will Barra. statements content I our be like over turn set. to begin

Mary Teresa Barra

morning, Thanks, for Michael, and everyone. joining good you Thank the call.

and over team Sergio family FCA and Marchionne's loss. would start like well Motors, with are the to sudden comment entire I I on earnings, General friends Before thoughts share that our at his as as

to will he had in now, I to I'd And be for accomplishments the all many our think remembered numbers. we agree, move the Sergio industry. many, like

EBIT-adjusted $X.XX. of EBIT-adjusted we generated X.X% of revenue and net $X.X billion. $XX.X a of perspective, We from EPS-diluted-adjusted had margins billion, First,

free our billion. was adjusted was cash ROIC-adjusted $X.X Our And flow XX.X%. automotive

currency plan. Our financial and quarter, including expected higher meet results than the solid, faced commodity our whilst prices in second devaluation South external not significant We challenges America. did in

that headwinds been continue. to will mitigate taking actions these have and We

into extend share to this in and expect the However, minutes. we Chuck I will this second on few more and volatility half, a

want out strong that demonstrate improved and we through do the We I and and though, sales that crossovers, market to do sales discipline. key accomplishments trucks in of U.S. with share SUVs. the we point the strength are business executing Before quarter

Sierra equity China we and have record Baojun validation and new contributed share. models deliveries Cadillac addition, the performance in income earning XXXX record was In by continued and miles our And GMC high pickups the quality, subjected and and to record loyalty begun in our in and assets on QX to earnings strong driven financial a quarter. million all these and accumulated August. growth Chevrolet full-size history, our crew to of and delivering over Production tax-adjusted been GM and in before expect a market X contented begin we've cab most testing validation. stringent to support schedule, have to trucks that customers commitment To Silverado testing

of and addition, alliances will secured us future mobility. deals landmark the redefine In we help personal that

MPVs we're all-new truck two SUV transitioning Chevrolet to launch XXX% current our mentioned, pickup on With and second track are to the the XTX full-sized on and this sales the plants deeper the high-demand launch outpaced increase including luxury share very where generation where half The double-digit And brands pickup market look deliveries. meet is record and Cadillac June introduce over sales our core at with at year, quarter. the trucks SUVs the gained turning going as business the Cadillac China our new of capacity models Trax, XX by and Sierra. to of well, is XTX. for and fall. United GM shifts operating GMC X% the the Chevrolet industry. Traverse In up Equinox vehicles. I our Let's Silverado focus to first take performance States is Chevy half posted Year-to-date, through in segments has the a demand and will year, in while the a including luxury GMC

launch-related China. of increased pricing competitive not expect costs comprehensive trade Chinese strong We the flows. our to in impact our and current expect our U.S. in existing established China of But assume outlook does confident the and any to local market in years year remain pressures half we strength launches, second beyond of because brands and intensify. we partner, XX in Due

reach zero and at also valuing crashes, $XX.X to zero continue landmark The investments congestion, and to provide a for step deal to with an signed zero necessary We to commercialization models. with the important expected GM on partnering scale. be our took we next-generation billion. vision future capital toward by we development emissions, at our EV our And Honda all-electric SoftBank Cruise respective of committed battery are and SoftBank GM

adjusted modules this battery expecting share we approximately material EPS half and effect GM, has challenge year. become we of and and in and creates and this of efficiencies. than range while will flow in for exchange year raw part manufacturing this foreign automotive rest believe year Honda and for from numbers the full outlook of into free rates originally it have our the go deeper expected, $X to and and expectations updated began XXXX. we $X.XX our Chuck will of the source from the Because some this, We deal, continue cash cells significantly As have the second scale billion. the of prices greater we pressure this will mitigated

Charles K. Stevens

Mary. Thanks,

quarter, be total significant As Again, expected challenging commodity X.X% in $X.X margins in Mary $X.XX a we headwinds quarter. EBIT-adjusted, did experience we and in currency EPS-diluted-adjusted are pricing in billion the facing to and in billion execution second South in $XX.X and continues than we America. greater strong, revenue, generated while second devaluations mentioned, in

flow, and margins. of results of These mix cash the full-sized automotive of in our and in below commodity is fleet from million year-over-year increased free are adjusted current $XXX to timing pickups, unfavorable down line trim pricing sales. our expectations. due generated billion America sell-down and pricing We North also generation with X.X% generated EBIT-adjusted QX primarily expectations. our $X.X $X.X billion

U.S. second transaction are quarter. net grow incentives which in of prices continue to the Our

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

focused look We improve expect progress we pricing the being to with later trucks of the half, as new we from And performance in an spending second as into year. incentive remain our disciplined the perspective. and launch we

North our Regarding EBIT-adjusted full-year XX% achieve margins. on to of path America target GM we margins, are

to time. largely more appropriate this headwinds XX% However, are with we at is commodity-driven a the range facing, X%

challenge, by International, is significant in driven continued $XXX Argentine performance devaluation International GM offset EBIT-adjusted real, GM record Pricing on of million million remains to more $XXX in and mix Brazilian Cadillac, the deliver Moving to and continued year-over-year, million efficiencies. a the results up but for China partially equity Baojun, offset of was strong than year-over-year. pressure cost of from down and focus Chevrolet $XXX richer China. income vehicles, with by continued by strength the peso quarter, a sales performance

and GM Financial, few comments Corp segment. our Cruise on a GM Just

earnings towards record before revenue second assets progress to billion, posted grew full record $X.X Financial billion GM and quarter. the billion of just continue in $XXX XXXX. captive, a over $X.X Earning were the million Financial to continue tax-adjusted we of over $XX continue to the in Cruise versus meaningful And improvement earnings growth. year, future expected commercialization. million as progressing we in GM earnings full expect we costs toward $XXX GM for supporting quarter As

to reflects full for Corp $X primarily our We for segment GM due The billion year. the We expect in the Cruise in million year-over-year the quarter, full-year. Corp approximately approximately segment expect cost be of in an the revaluation to the billion of investment $XXX to Lyft. spend improvement $X still second

down flow due cash we said, lower performance the $XXX free capital. with of In I our offset flow, working line favorable allocation. billion expectations, and capital Turning million cash primarily year-over-year by EBIT-adjusted managed $X.X in generated to adjusted partially as automotive QX, and

to foreign our the has exchange significant outlook we dividends. pressure to original through total our more rates the from regard year, the been commodity our With During $XXX quarter, million and prices expectations. company shareholders for full than returned

the $X expect and While been guidance. of versus our original challenges to been some than we've a headwind the we headwind, net anticipated, have able billion approximately offset greater

EPS outlook of flow As a these is in updated billion headwinds our cash range reflected $X from the in of free excludes incremental outlook impact result, approximately GM the automotive adjusted which and $X.XX Cruise.

entries growth pressure brands. due As elevated GM mentioned, we Financial. market costs to second the significant and multiple half at in In year-over-year across expect in an launch expect profit competitive in we China, the increase pricing

QX cadence, a pickup will than basis, truck relative production. on we full-sized QX as earnings stronger Regarding increase be

FX and mitigate primarily of commodity while rates, to we effort So, every recent result developments making up as a the are headwinds in pricing sum quarter, significant we're impact. the to experiencing

look The full-sized first deliveries see at content performance, rich Regular strong. high solid. mix our you cabs. and level truck is will month, on this that remains of execution with plan. began Our earlier next launch our begin of absolute And a customer very month it production when remains you'll crew

in term to South GEM and in launch recent program macroeconomic new of profitability by America. We continue in our path improvement to see in a driven our America, restructuring medium the GMI conditions South actions,

in us and as in continue to make recent the short strong Thank over now we profit adjacencies We're and evidenced in the comments. Financial, considerable That growth to to excited including of and the execution aftersales move of about the call. Additionally, We'll progress Cruise. we concludes expect GM these ahead long portion SoftBank's opening our opportunities our mobility both continue of and investment OnStar, term. you. expect question-and-answer GM future by

Operator

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

John Murphy

Good morning, guys.

Mary Teresa Barra

morning, John. Good

John Murphy

put and be? on doing. could and pressures. through also out your more. those help better, increases price the you're in to suppliers down can has to pass this question been into push the to directions, there I'm action material execute to any those thought better you or successful the curious in take customer doing potential potentially actions first just a Obviously, internally in and two bit there's those which raw But or Just how place a

Charles K. Stevens

$X you billion, that just about the the unmitigated $X up mean and a headwind unmitigated kind billion. of something we you to half, the we $XXX big challenge through end I doing by so headwind executed offset on portion of billion me second year that to noted the our we've that. north actions We're on is had possible, a of challenge. $X of where The – or just technical pure gets both pricing than to look net at relative pricing. which MSRP. the more look exposure roughly if expect commercial doing at incremental already and also let the of favorable commodities when to that, And at the FX the year for pricing I and is be savings million headwinds portion of for Well, commodities. We're supplier, and commodity size day, a of those that through commercial that

opportunistic the have we've So, extent market a say extent the I'd driven along to seeing. recovering of that's we going have to execute in will that the we ability we're challenging. that again, the competitive pass some, in is of is to big the we're Obviously, more mitigate that But through John, will. to already than is pricing. executed or going the that XX% United to be or are States we're market in picture This actions headwind we kind – the can, market,

John Murphy

headwinds fair be billion offset a the it that gross maybe about taken to with actions? characterization? through down you've So, to fair some other potential on characterize actions based try to Is $X billion that current to would $X more

Charles K. Stevens

look wouldn't the the Well, I that at we we billion, to actions mitigate have thought adjusted guidance. obviously, if $X there would say we – our year, were when remaining further

of that across as sourcing that a look we a to We Obviously, cycle pull substitution from are nature. chain. in We suppliers, footprint can with work can longer or them look levers work I think XXXX, ultimately term at the on we entire through at materials. with go-forward we'll replacement can continue perspective. have basis, we value

this in piece as margins, where that's that's if unmitigated the So, kind at. piece. getting not we of commodity again, will erosion you're And a of permanent leave this

market is would and Brazilian For The price through there's American largely FX exposure in Argentina as you FX, and piece aggressively and a I effect. would is through I we balanced. South know this of for the the in peso We're taking possible you that would we're action And say acceptance. those things pricing these between the a to say cycling real extent on this Argentinian to we lag exit rolling as unmitigated year. the lag expect be quickly and that year, There's the Brazil. how relatively just

John Murphy

That's very incremental price sort sounds segment, really of going is in in the this something there mix of like were in in but old Then pickup? pickup sell-down landscape sort of the or next competitive truck is else helpful. some it pressure, on there the on the

Charles K. Stevens

That's And and good driver new we're at in cab look XX,XXX a was pricing Yes. our expectations. I down talked at feet underperformance what And this think from we're a to Mary starting and of the when is question, largely below seeing and billion bridge ready plant trim American was the what The ready at dynamic results a second a getting year-over-year, when would say you launch cab. again, was to the quarter John. truck. standpoint Both we North that and When that the transition mix getting about biggest the our you X.X%. crew about quarter $X.X the I truck seeing new selling stated because look in price commodities. crew from KX the perspective in perspective we're mix down, the expected to you

cabs, producing largely were regular contented we cab profitable as as which high selling are clearly not and our double So, crew and cab.

more timing of cycle rest that year. year of that's into the this as through issue go So, will through and next a

John Murphy

there get still of think basis the Okay. for from service, next And are commercialization you lastly then business before sort tranche could more Cruise, just of in of line of to a level on the sort Cruise, about operating target X and expect with year? a potential as think branded about Could that rounds be funding be on basis, we for on-demand sort we investors and an truly And this to really the there funding what we and funding? monetization autonomous vehicles? of of as see of other should just the first down SoftBank, progression

Mary Teresa Barra

that continue we're achieve and progress development the we So, to John, looking for.

network to along, said Softbank in with of we don't going this investment be think, the everything But all to we've important with own validation of that's Cruise, (XX:XX:XX) As a called safety. on we're safe our the of the interest But technology we've then and think But leveraging think already share. taking the that by We track, and anything We're do I XXXX. that, creating network in having continue integration. further I of we're on and beyond. driving what's first ride-sharing Cruise have and path best for then deployment because gated it's look a employees. I did have focused business, – the we'll are they deep Cruise beyond I the in growing enables what a to where said driving the Anywhere we're approach at very in as environment

John Murphy

Okay. Thank you very much.

Operator

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

Joseph Spak

taking for question. Thanks the

the that GMNA, half are first considering second XX% those more that of the in get to new half remains, coming programs to some offset The Just X% the on? the to and you where versus to some thinking first about on improvement. in new trucks really cost the – the so of follow some half is of mix commodity

Charles K. Stevens

be would That correct.

to you that. – down be of production versus year going roughly second the of My That's the the second of the to picture kind flat If were production transitioning going half we're first versus first be in would to XX,XXX be out truck units. look XXXX half year, in the half of going of last half. is truck at we big

of mix that's a trucks and And from what and that. pricing going got past the a do cycle new we'll both perspective. the to benefit you've So,

as year, the up Again, the offset got add the the is when cost fundamentally, favorable first January remain is we But zip that some the escalation. commodity the that unable I picture code new D&A to engineering back XX% about mix, think more will favorable The primarily issue which half the you've half, you trucks drivers are margins, offset. big commodity big I relative be to So, think of all in they commodity headwinds. second end were second and to new kind the in in as up price with and headwinds launch associated in to it the of versus and of X% for going largely you than half.

Joseph Spak

Okay.

Just taking maybe because of and being standards pushed homogenized more a was there of you was out step economy sort positive across ability it to bit little standards sort the even a about talked actually the California's withdrawing back quarter, believe news from region. about fuel a of the obviously in Like past coming how I out made that the regulate. some

is what set their California's still own I – mean the do able or if just you back? that stuff So, they thinking think of I pull sort to prefer, or

Mary Teresa Barra

have one What we're poses the is that we in country. national we working And ultimately believe, the national what autonomous place are and national – important. new going standard vehicles. interest is remain committed in, in increase requirement that emissions all-electric sharing very we it program but for and increase would the But an – one toward of future, one economy, fuel to technologies like best reducing comprehends opportunity everybody's in improving is set to a across to the putting of the

Joseph Spak

or segments me certain you'd the progressing you're you back, And longer-term as about licensing envision you Cruise, launch, for for technology? Okay. it scenarios step the got you on do this as potential as geographies the do-it-all work, Cruise, taking to so you me future out any technology certain XXXX clearly the consider if But approach. be think one – it whether where then last you're think of let like sort well, let about seems towards a

Mary Teresa Barra

key and it all and the the going technology and to and And to think you that. is we're at thing drive I up technology maximize once to developed value. correctly, we said any Again can shareholder deploy opportunities do safely to look so we ramp get that, of the really the use validate –

opportunities. now So, we is right Key to technology and will all safely. developed deploy be to open able the be getting

Joseph Spak

Okay. Thank you.

Operator

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

Ryan Brinkman

for Thanks my question. taking morning. Good

Mary Teresa Barra

Sure.

Ryan Brinkman

trade. on is question first My

So, us around actually free within I to be could particularly you? trade scenario perspective? it GM, NAFTA suggest been for potential the know for changes there how XXX to could share shake tariffs scenarios that the think that applying thinking management trade as NAFTA planning we've positively block, potentially global from pricing actually you vehicles trade, from seems environment all but quite quite positive stands other range though potential are but could for out negative Has that possibilities? of I that changes to GM NAFTA. remaining any GM also about end up being certain outside a you or such for the to Section imported How explored

Mary Teresa Barra

pieces Well, when the is at infinite you are. of how almost possibilities range look there many moving

on when said, is you the the the have believe make supply make the traders. to and important auto modernize for generally it's of We NAFTA the chain, to General we understand they As we What NAFTA government right of free industry it's across countries across important think complexities government in providing focused people we've input been length administration but Motors, to and are we investments. to sure agreements. the the

the be done resolve. we're in But fashion. focused We think on important. made again, NAFTA are can much logical that's moves having agreement whatever a So, very

Section is a this that As based win portfolio perspective we're able I but as to sort crossover our truck of things be and other best are on whether marketplace. that we're the in the it's sure we're to on the shakes try out discussed, out out or with that looking strong have that think scenarios to we those and going being going we sure some product making the to have. And lot make that take to products of there's advantage a car, from obviously it at may we opportunities look going the really come of focus at what XXX as we're

Ryan Brinkman

headwinds was while currency headwinds consolidated see. Thanks. large what I was previously in America, South was that International a there upon depending performance given record. the then softer you're China And seeing on the the seem of IO, called quite

of those So, help America. were can I magnitude profitable you driving of because headwinds you understand the maybe and it? us South slightly only last in kind asked what's year

Argentina lower your that if and like Brazil to to going pesos? paid reals that take of there seem the profits taking can headwind. there certain actions EBIT lessen So, to not impact translation now you try into And any to are of components explain the currency you may depreciated for so, you with or the and Are having does degree are be import that forward?

Charles K. Stevens

largely real. speaking. currency peso the South Well, the the the which devaluation both and broadly in America, million, was net impact of of the GMI in second Significant $XXX was Brazilian Argentinian quarter

America, the hyper As localized. look the – because $X to we've the will to price said Global South next at XX you strategy we to been which inflationary has we It's up Brazil somewhere we're I and Brazil, to the our or price at exposure ARS but program just will, X.XX in The you're X.XX there's XX had At which real of mentioned, inflation GEM that pass over very, solution these plus because assuming talking the would can in to day, Brazil's at something doing and expect environment, different. Emerging to a Argentina that. and expect that the exchange piece very launch much year, when peso months current we'll starting on difficult more the minus, costs lag, in a some XX. that – that American earlier, close it be along. year, I BRL the been Brazilian with was rates be there's it's rate South current execution billion continue a the persists, now low. and assuming would stability. aggressively Market the those based pick believe of BRL we don't this We unmitigated ARS for going it this as catch which and beginning And around we're launch XX.X. is Argentinian to of

that's this. path the So, out of

that think of consensus this year Argentina, once kind their Brazil but we the the everybody's and through one exchange. government view get some of policies around fiscal on and of are these view, and I reform, going kind the clarity lack government is of some later in got the given capability move point recover, that we're biggest elections execution obviously the Brazil, of pricing to the is that currencies both focused the to offset

So, your I think is our the long-winded that QX for the in it Ryan? rest is a Answered but answer, of what kind sized up of question, year. view

Ryan Brinkman

XQ it same that the in significantly for remain exposed It's quarter prepared few quickly weeks Thanks. the while higher high in At the can remarks helpful. such were prices they sharply quarter the appear they expect sharply or see just in of in very the as high. metals we copper, you metals, lastly, and to the in Yes, remain higher to of back they And that the you're after other last have on the time, end moderated clearly just here. they some the also aluminum heard year. half I to were Steel prices then does. prices, the

where of level of Thanks. spot your expectation is or do question what Do cost XQ, latest own the you metals of cost available level you incurred assume they prices in might your in reflect the the for the back So, trend forward? going like assumptions half?

Charles K. Stevens

one these own Yes. commodity of bank at based We all is number rates, different spot, on a of informed look view of the one's inputs. is prices forward our – indicators one

of most obviously, that seen some the the recently. in pricing think we've pullback aluminum I

that factored thinking. into is of our All

One a of to the need understand is there's things that you lag effect.

at its price have when it least to when the a through. works way moves ultimately three-month We from lag

So, in of we you saw a see when the second into that's the million run-up on kind half because chain. lag effect QX, to had three-month feel year the in the run-up the that that going supply QX, out playing the pricing headwind the in net QX. commodity half in $XXX We of second why of we year in saw that based kind of we're the of that given of full

of of aluminum factored including all say all I would back is unmitigated is the exposure aluminum. when of Ryan, driver the that frankly, in are biggest biggest steel. So, the those biggest you recent commodities. And up And look our and exposure, really in, our steel at

Ryan Brinkman

Thank you. helpful. Very

Operator

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

Itay Michaeli

you. Thank morning. Good Great.

Mary Teresa Barra

Hey.

Itay Michaeli

Maybe a I kind can for us was versus for just thinking latest question original XXXX better to get update EBIT you Chuck, of core XXXX the XX% then think kind America. also a XXXX. North And think on on guidance how half margin. I your should North and implied outlook think there? we takes Because about on your about the of America puts second

about XXXX maybe talk and with a that? So, kind these bit little in continue of does headwinds that

Charles K. Stevens

couple going here for XXXX set I be Itay. I'm won't not execute to to because to just comments, of Well, a guidance it.

the all So, I really forward. to But way think strong. for about easy that would is remains it be get me seriousness, lean aggressive in XXXX would very and would I execution say

things that are those optimize control. to work to our continue in We

am the uncertain the a XXXX. point light of pickups But in are you year, environment having and at that time when when this in going continued to uncertainty with to hopefully, Financial get is continue I to interference improvement but and some well, associated of environment and say not out for continued that. would growth front a foundation in truck year look the at We volatile in a middle here of of there very full you duty us we're strength launch GM macro the South look next the in I execute my and at America, there, the and given

and drive years on improvement focus about to backdrop those continue the strong confident optimize areas in of is, for last we've the macro of the will number business execution that results. I'm the continuing whatever talking we'll been in to We and

Itay Michaeli

you'll And much get launch, that mix. I half? that on terms like? then helpful. opportunity crew opportunity of think you That's on incremental talk do $X revenue the previously margin in And $X the rough a the mostly what about of TX highlighted you billion on think cab in look How second billion can the you might

Charles K. Stevens

and I – opportunities You're when you going TX right, vis-à-vis the up-level as was KX. both had chart like lines, constraint we Silverado Conference, is the words In of crew looking the cycle the and back of Deutsche and cabs And the life the Sierra at that seen Bank looked kind recollect. kind we've the opportunities. to at that when entries at Ammann's past removing have in other I KX cycle some of in on entries the that, that the would to we new life the we that in were say

start So, in second wouldn't that benefit I half the XXXX. like booking of

all to beyond. profitable that continues itself the and be roughly going the XXXX Obviously, going second mix we through XXXX to we're But cabs. and more until KX. rich of Relative And XXXX than impact to that and see manifest XXX,XXX think they're produce full mix; XXXX crew they're going not launch. I half, move as because the TXs. to rich will in we're to build XXX,XXX to

Itay Michaeli

maybe for That's very question helpful. Mary. strategic And a lastly then just

strategy plays payment that shared can AV peer-to-peer, perhaps as more potentially With platform? use sharing peer-to-peer monthly EV maybe make yesterday on announcements you into about EVs talk Maven and future on to compelling platform even how the the can you an from a the platform on GM's

Mary Teresa Barra

Motors tremendous we in Home, it perspective, Itay, Maven Maven different amount think Maven with it's City real now estate what then Well, learned I contracts their installment seamless and And really and from a we our with what Ann a in people the has pretty way well. Maven in you done connection, said available with with have especially next to whether mean, the the defer Arbor for with we've to this the others of highlighting OnStar Gig, think the a I three for cities and costs. it allows the General is peer-to-peer. car make some

on and So, regulatory it perspective we're having more, deployed that number a who it offset vehicle vehicle in the huge think therefore higher be there that will on use you to cost a something the the because a and EVs, from of do usage benefit gets better a see I as miles a environment. impact Chevrolet also demonstrating environment vehicle has what we people Volt a once a you Cap sharing way and the suggest is of and use X a we've

excited really already today. our in it in are peer-to-peer, cities, is being the And three Maven learning learnings in a about we've factored to expand Cruise. looking pilot and that and business had of the for about in the considered current we're from then So, the for at many plans what opportunities

multiple benefits expand, a gas good autonomous. learning, again, leveraged those customer the continuing being for and we greenhouse in So from see perspective, learnings to

Itay Michaeli

That's very helpful. Thanks so much.

Operator

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

Emmanuel Rosner

Hi. Good morning, everybody.

Charles K. Stevens

morning. Good

Mary Teresa Barra

morning. Good

Emmanuel Rosner

your to half and for to first back second to half was I walk hoping come GMNA. specifically

for lag production you have quarter. those probably EBIT factors right the in the – dimension of up a material that. guess be the factors half, You're have give obviously you nice second because behind my I fourth could for commodities, half, a second to then if have mentioned but improvement I that's or larger understanding and just where very and your curious which then the an in assuming order you is and you for if was expect both pricing headwind those in margin just the you especially be stronger you will

on you give dimensioning us So, factors? can these any sense

Charles K. Stevens

the tailwind of roughly to cabs the half the the the year. crew of going driver year in just mix. XXX,XXX to versus biggest in you half you'll and be then, be look Boy, asking because second I that do first when of half of QX, improvement, in QX that hesitate up reconciliation second say the the at the a biggest that. I for be We're would – will

dimension put year is majors pricing largely would and that in pretty of as dollars price. net pricing. related of zip that's as to code the typical XXXX $X favorable, Second, that well I And the billion model of

is be together and going second billion those to lower have down and production So down half you December factors that overall two July significant Headwinds, always of are the $X volume tailwind. a and we the months, second our shut in are in overall, the half. year know

kind I then launch-related. say $XXX And would the and $XXX of to several engineering year is range. it mentioned, the million hundred the commodity going dollars. That's unmitigated cost in up, million As headwind that, the million half D&A, of I of in primarily second piece other call be to is the

mix, will by costs, I'm partially those, launch-related and is driver just being which price, commodities. again So, biggest if offset be positive volume, then driver fundamentally dimensioning half the followed by the biggest seasonality typical second

Emmanuel Rosner

increasing piece, the extremely And steadily commodities seeing for right. throughout your the – estimates been helpful. headwind. year the up you're then so That's following obviously on All just

guided when it you this million, first January, $XXX think was in $XXX I million.

$X at current the talking obviously that If does what like XXXX? look about net headwind levels, we're billion. in prices Now stayed

Charles K. Stevens

Yes.

million the – little North Let the is commodities I American headwind to provide FX, falls net big Emmanuel, broadly of $XXX America, could speaking, that I all South headwind and a $XXX is largely million bit unmitigated $XXX the A me clarity, million this. million. commodity go $X year of the piece portion commodities. into $XXX and more not for the piece roughly say, to billion the on unmitigated of would obviously, if back,

in seeing other that. year So, we as seen and on to something that impact half run go see into and All market maybe days basis run-up what different of which year, the and it. billion $X year just the that is the play full offset can't the mitigate pull that to the early second this would half we But a enough factors, how actions in second commodities. levers we like a talking out we've with these year, take a about to quarter, significant all exit billion need we're equate of can rate it's you're to $X.X in second for just we forces next

Emmanuel Rosner

And helpful. the up ask stake to that very GM Lyft. I super on wanted marked That's just I in saw finally, Lyft. Yes. you question you a

more what left working of curious the stake this at going us them? strategically, so, last your Lyft terms the with you your We And can is the what and both about month, course with plans and in is also forward? point? what with stay Dan board tell plan Just obviously noticed

Charles K. Stevens

disclose to value second with pick that. obviously the a gain was I'll Yes. don't up booked latest We Relative investment, Mary. turn as which their Lyft did, to of it quarter to strategy. over the round, in we funding you relative the noted And the

Mary Teresa Barra

Yes.

have at with we deploying So, or vehicles, we product, as one good with Gig we a we're AV we using again, any move the on now. joint have Lyft. relationship into formal as our Maven have on don't deploy going we projects will partner, partners, Other looking than go But said, right drivers currently two own.

we've that's don't have anything further I with continue and share plans we now, what So, right believe. to with said, Lyft to but

Emmanuel Rosner

Thank you. Great.

Operator

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

David Tamberrino

A Cruise through on you at year, morning. question million. the Good we're $XXX Halfway the Great. for spend.

to XXXX. billion guiding call XQ, ramp associated going run in $X.X XQ. it's pretty still per What that so is to XXXX? maybe So, that with? is It significant $X.X burn into the continue million like $XXX-plus maybe You're it a for $X ramp billion. implies Is rate, right quarter billion,

yet. starting it's to help it why Just ramp, understand why us and hasn't

Charles K. Stevens

other one, Cruise the the movements Well, aside Cruise, segment. Corp Yes. just in spend, setting

round. of quibble not associated There's of but zip ramp-up. more the in spending. first I engineers. think half We're going cost million I'm Obviously, in ramping hiring $XXX we the with we're more to the code year, the on the somewhere were up

that's expectations. to to the second be going that's inconsistent year, half not of wasn't the in So, in the spend line It XXXX. get flat rate $X and with billion our to

to to best talked milestone go for our to about funding expectation with alongside the in which billion about them I the exit as Cruise. XXXX and think funding The $X to get is way spend XXXX, we've billion $X.X we we'll launch XXXX. initial Softbank going that investment be the the think and commercial

in or this, give if we'll XXXX. an to now million million our through roughly But hey, point to $XXX will we the mean right or spend $XXX if do that extra opportunity billion calendar to spend $XXX it, probably current indication. and million that year, expect that's $X.X So, this that. balance another we'll It's just of million a advance an $XXX great thinking. we I need accelerate you from get

David Tamberrino

from to get Chuck. from And going Thanks, were be maintain very tracked your to take we million a for for within year-over-year. original within So, an to forward variable you crossover year-over-year? was contribution incremental helpful. profit more then substantially able $XXX able to are think of still $X,XXX segment on guide the the thinking your What kind competitive, crossovers North that but going of cash quarter to going seeing back hood your competitors? more do pretty incentives Is or being about think think with wholesales you I share That's Okay. you up you're segment, America of the guys implied crossover? $XX,XXX I it

Charles K. Stevens

and Yes, of going when look to say far at kind that I expectations year, we the would we're the year for that so our generate tailwind.

that well, really, in planning and I mid escalation has to very, and the and But would need very again, to very, bit that. continuing we segment at strong our dynamic And we're $X.X factors. is own really what we better well. and is our but aggregate talked earlier competitive you the of which volume The for think expect – or that exceptionally segment-by-segment, performing seem crossovers a a holds, better us our performing competitive a baseline performing look compact be little that, mid-SUVs is this that. is could there's more better couple and that driving pricing almost holding be to bigger a ultimately perspective. different are be from One I driving that very But think challenging still year, than our SUV we this is than expected. is about I pricing slightly billion are

David Tamberrino

volume? from And generally that's

Charles K. Stevens

Yes.

David Tamberrino

billion take change in cost And that's kind able Okay. at walk probably July. us $X you seems And China now what to, pocket going believe, really, of from we're year-over-year. repeatable JV I you're up equity billion $X in June, of margins just just were Can out, half? if through in then lastly, a how It the billion least and income? maybe guidance to back is or JV the like an $X through air into bit above

Charles K. Stevens

pretty number results business of cost unlike you because at level environment, improved largely. healthy efficiency. last over half overall able the the of years kind and big the to maintain income we've been if competition, of some look the drove in first of mix the unlike equity Yes. of the Again, That a of picture, year

half FX the and there renminbi favorable addition, the strengthened year. of The versus first year last component had was a in In expectations. versus

half in or we're else As everything first opine. we the we we of not whether look the I'll year. clearly, a half year, year situation earned dynamic else, second the the renminbi at equity – the the is in let of the half somebody look to second and and of it's $X.X at related the all income of now billion trade where When weaker,

expect of a because competition and We headwind models more in drive new second launch bit half up. the we're pricing there's XX number launching of a drive of in the a the which segment luxury from a perspective, will will year significant which launches cost

overall a got the built not built plan things what's uncertainty comments, of pretty half second years. China of that said, strong to American some if constructive change some half over we've go. of versus out. could on to is very I still half. We're And significant issues second billion-ish relative year but that I the that's through in strong we've $X of there, So, be got in down in a expect very would a trade position expect and equity into other play discussions With be income the going companies. first But other we noted a strong we very relationship there, see number it's our as partnership vis-à-vis opening to importantly, been depending the and year. these Mary let's sentiment her think the very, where how still as these go China That's

David Tamberrino

you Thank helpful. the much Chuck for Super it. Got very detail,

Charles K. Stevens

you. Thank

Operator

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

Adam Michael Jonas

Yes.

there, you ended question, first off Chuck. to The want just build where

I – facing of think Japanese in to kinds were I disputes. single sign actually if at or China. of I seeing know numbers, potential China, of look anti-U.S. and agree, sentiment this just it's biggest the you risk the the experience national now the hardest in define, especially but GM that's territorial but right similar On Any you're brands is Koreans and there that anything disputes when or all? not on

Charles K. Stevens

No.

those seen yet. happened with through strong very yet. not with and again, the implications. of of that it relationship have starts And we to have We But certainly and Japanese not very potential cognizant anything But thought Koreans what a seen partner. we're obviously, very, our any have the

Adam Michael Jonas

Okay.

The a very Mary thank including on and thoughtful second lot you as the thought XXX% Mary. question me, Mary, it I for to a lot SoftBank. very, and – side, people on that class, for is on to your all, first of meant want Sergio. was message I of

relationship Uber, been in be to relationship at read least guess the SoftBank-Uber you've the SoftBank technological could are away these – business Cruise? kind investment with post on. a ostensibly there the developing be the of that within deeply accelerating Uber may So, with I opportunities from more into understandably of wrong move commercial relationship what you things number now pulling from outside, that Lyft, are investors

Mary Teresa Barra

interest the the we're what's I going at shareholder. of Motors best Cruise, do, think to Well, in General GM

involved they're world, to States both ride-sharing Uber does and SoftBank in the many different United already the more with having many across And the strong opportunity that before. us that opportunities the had think give a of an look from the relationships have at Lyft other of directly relationship and investment with some we like so, of with globe in relationship Clearly, I'd we to the and those although good companies the companies. ride-sharing around

formed. this now. assets created gated technology and it's the – options, right I think But all when really the meet the considering developed safety with deploy SoftBank standards. It that dynamic the one gets we we're many value space and have can we're you many, again very you gets and is comes relationship just the a So, that of that

Adam Michael Jonas

us but the there? there? union any one to the of timing resources if result and rationalize could we remarks, charges And Thanks. terms one-off efforts missed costs Okay. situation, just the I'm as And the capacity are profitability a Korean last maybe with you sorry as of of those I delta the you and Chuck, and on appraise where my in prepared anything in back ongoing

Charles K. Stevens

supplier-related rolled Sure. the our again of charges cash and through payments QX. ultimately $XXX quarter the all associated QX dollars consistent. second couple with the We million. we It that roughly the The and a tranche VSPs in that results. employees of through some paid we to claims the tail significant hundred vast actually fairly of was impact separation majority was There a rolled the expected was the in a final effect restructuring which as million had

as largely costs I'd – So, itself QX, move is are we through this behind the say us.

code see we ramping of expect enterprise cetera, the we XXXX, talked there, that's rate quarter associated third the the about some in of zip union, speaking. closure, negotiated the the a getting restructuring both with to As we an $XXX broadly at run million that would roll benefit et run after year. in the starting in and that with Gunsan And the through before, concessions that are and the level, rate

Adam Michael Jonas

All right. That's very clear, Chuck, and thanks, everybody.

Charles K. Stevens

Yes.

Mary Teresa Barra

Thanks.

Operator

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

Brian A. Johnson

Yes. I couple a questions. of have

commodity down, some relationship time? of that suppliers, the are you A, raw and the as mills, raw And get indexed First, like commodity in mats. old say aluminum When suppliers and it steel with correct? those on to including B, saves how it's renegotiate with purchases sounds you're you on both about bad costs what's is materials, those days from used as to contracts. GMNA GM your that given this direct try costs well contract thinking indexed primarily supplier that

Charles K. Stevens

those is steel. commodities/raw The of material and The back side I and what to that that product go the talked we diesel steel broad unexpected the is pressure driver and oil-based it's biggest when about really of to to the Yes. also index would that on or in. of input about before, broaden business. though, going answer resins costs your first talk I all accelerated question like includes say also least at And the

input opportunity long path and used years working term a constructively strategic four having input to to do to I the But do an that. the one footprint try to think drive one chain, suppliers suppliers, around I our going we about our across we're ago, relationship warranty, years supporting the efficiency, discussions you a that you the and is to some we very, and for think at back mitigate is global very go, with go with to negotiating is to productivity, opportunities we of one more beneficial foremost think ago, three, in has us looking cost, think input Where instead and just one and going suppliers headwinds right. relationship. you approach past. value say opportunity input no, proactively And that us been we're where five continued embarked what lookit, when of continue So, is on want and that these about isn't relationship, think when through when and first to there's about to our

with suppliers and through, we work we'll what flows that mitigate then fact, see of As index can a to to matter through do efficiency.

costs, vast continue very very, are to the account, On And that component of pressure take side well side, and flip raw the working of our we'll from we've indexed. it that majority there's on as materials and not the with escalate to clearly, to into been suppliers that proactive that. try do to mitigate suppliers

Brian A. Johnson

Okay.

trade. to over question, Second

the currently? that give end content obviously up factories chain move table thinking coming Canada, vehicles U.S. supply that what apply your from then your to is you that Mexico content through, your did the either NAFTA and XX% in NAFTA you us the there. tunnel wage level? already light on be of Can or if would a One content proposals to at sense the about maybe on with is of to rates the what hit of go And high

Mary Teresa Barra

competitive of I So, cost the of the help that. are that what we to understand allows that I'm get to closely overall that the globally be to going us an details with will But maintain not and is trade where base we make working are intricacies to from sure share representatives into level. we

it, So, you quite specific providing We're give I'm assessing of going of aware bit and a it, details. to input. not well

Brian A. Johnson

stepping final while from Mary, gap? that world around the a the some the Sergio as auto auto to sad guess fill just the as with sort sort I political senior scene, of a that land who's question, you up of And for on CEO Okay. are departure note, in of of been

Mary Teresa Barra

that agreement Well, with I to and is our in shareowners interest of clearly I'm our of And best what all on interest the General of best trade my going to do where association we think and to others work strong try, voice into focus. Motors an the is the to think for me. to that's more world. a the appropriate around to administration, decide, can, But we and into have come governments I not

Brian A. Johnson

Okay. Thanks.

Operator

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

Colin Langan

I Thanks for you would were you what tariffs imposed that lot on color XXX? Section of since potentially any do Mexico, be if and Can you taking production down a question. in my a have provide risk could under particularly know

Mary Teresa Barra

what part things an there's and exactly would say, happen almost of be it. could would that a I infinite of number

I sure departments focus a and hypothesize we've the right don't issues time that aren't something spent going don't path has we dime, made But a it's the think serve and we're a with And big sure unintended you It's path. of not that that jobs. don't so also so happen a things everybody to a other administration to appropriate a lot specific respond right base quality on more a right on there's So, investment, these if everyone's going that industry Clearly, providing I to best U.S. some understands of can. that the move understanding fact provider and I'm a And – strong we're believe with things specific anybody. have and I industry. of extent auto with in we comes for think to we there's there's and to on – XXX an making quickly or decisions in high on continue NAFTA that that the NAFTA. have make just made now capital fullest would of the consequences we're out, resolved something on broad to again input will focused Section that. interest get

Colin Langan

– a XX% has mean, overall as and interest? there out have what your if thrown Any mean for color tariff, on that would I what, you been cost

Mary Teresa Barra

I've what be impact. months, end intricacies Yes, details and and drive on a spent really lot time the again, will as of last in lot trade that matter this a there's of several

something that. I like So, can't really speculate on

Colin Langan

on color kind Any you on revaluation And the there, broad it. year-to-date? I of in the much was it's quarter? just a helping the are items strong Got been Corporate/Other, that Lyft that help what think quarter. mentioned the other are bucket? was How

Charles K. Stevens

Lyft about from was the benefit associated revaluation The $XXX in Yes. with million, quarter the Lyft.

PSA the did from transaction improvement our some in we last had year. recall also that We

drivers in and the depending quarter what they've biggest have favorable We PSA's quarter. happens to and, on Those price the get year-to-date warrants and Colin, those what so on mark-to-market trajectory. stock of we've been a far, obviously, second every seen would two be

Colin Langan

tariffs on an large in China? opportunity your you're will the I luxury pretty that tariffs mean and of Cadillac. actually get lastly, you? products announced create pretty some localized just And competitor any in it. already thoughts Got for Does Some

Mary Teresa Barra

We're We're now vehicle across only general is pretty that – the localized – we where the right board. our strategy sell. build

bring sent China. the we course of here in And are Buick products are then Envisions have it send there. wouldn't majority very so, iconic in although a China. market. strong in Buick It's on Envision important it's note to of the that Envision, we is some sold There capability low well Chevy and portfolio that And it's And up the of the Buick lot here customer manufacturing we that the as of Envisions think quantity of bringing there. generally so be we most here that's something that important we Buick something we products volume sell efficiently. round But low to provides just And to we'd the do like choice. that are or capitalize again, building

Colin Langan

my Got it. for All Thanks right. taking questions.

Mary Teresa Barra

Sure. Thanks.

Operator

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

Mary Teresa Barra

I focus, to want managing this are our executing hard with discipline are for we and Well, to and we to integrity. thank plan participating. committed want working business I And everybody note,

Our business strong. fundamentals and our execution remain

technology the and we the trucks have the position and optimistic We are cars, in strong about industry, key our leadership of mobility. of of in that aspects our future portfolio markets and SUVs, demonstrated personal many in

and same increasingly excited growing about commercialize to share provide beyond. crossovers segments, and and future. are all-electric connecting for into sales the to in the and opportunities with of we an that new self-driving investors At an time, realize SUVs the Our and trucks competitive financial and we're the and like-minded year partners vehicles full-sized our XXXX new rest are

service as four role and to her Vice Dhivya company. And of to decades CFO, dedication EVP congratulate and I do Investor becomes new Rocky who want President close, as want Treasurer to recognize his of the on I for Chuck this as Relations. well and also Gupta Before I

I think has in part we big and strategies. know played all a very that future developing core business Chuck and our executing

she build advisor and build thank know strong many shareholder of important relationships With I confident you very to major will with us and But the much. Dhivya's In on has do Chuck, driver value. drive and been of, has has and leadership very experience. very, addition, been trusted I results want Chuck team success that strong her and continue help he I and and to you. he that say to a me am skills a

continue I be recent you customers we're I create what better company's with vision. this, ability confident the for crashes, I this a do execute that's as our and about macroeconomic leave long-term zero we and world with our congestion as even to to So, zero emissions, safer, to to zero close, sustainable and value challenges, more want shareholder committed

you participating. thank So, for all

Operator

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

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