GM - Earnings call transcript Q4 2018 | General Motors Company

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the General Motors Company Fourth 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. [Operator Instructions] As a reminder, this conference call is being recorded Wednesday, February 6, 2019. to Vice conference President like Gupta, to now and Treasurer of would turn over the Rocky I Investor Relations.

Rocky Gupta

morning GM's the Good as year Dorothy. and for you Thanks, joining XXXX. we review quarter financial fourth for results and calendar thank us

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

CFO; of CEO; We Mary Barra, by executives. are joined Dhivya GM's I'm Suryadevara, today also number broadcasting webcast. this and EVP and Chairman other call and a via GM's

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

Mary Barra

morning delivered everyone joining. in despite good in XXXX which for thanks light-duty very our macro to results pickup and headwinds a We significant and truck. we Rocky, and year strong Thanks, transition

was were North the very results China strong performance launched and and crossovers. we as GMF result. delivered strong Our American record pickup despite environment market trucks

Let's numbers. diluted was was adjusted billion, EBIT our EBIT Net XX.X was adjusted XXXX get billion, full XXX was EPS adjusted $X.XX. revenue margins the year X%,

cash XXX adjusted on payments flow billion automotive excludes four X.X quarter the trailing a free Our ROIC adjusted this million and prefunding and XX.X% intention was and was basis.

linear, flow As we transformation, shared and to we agile move as XXXX cash the in to into phase and expect win. January, our more we better earnings next of improve position

expect continue on believe mange continued and will based to current business around globe efficiency the on we Our our but macro them market favorable uncertainty through products outlook We initiatives. continue is robust conditions. we be mix new a to of based transformation cost that

fifth In million in more performance the U.S., achieved America pickup the year fourth our we earnings. quarter a and strong crossovers. at sales than we the for lead a year straight and delivered including record industry look where Let’s North

of Chevrolet revealed sales on it pickup with year will Sierra from in all We've and yesterday will sales the cadence heavy-duty benefit with full our continue this the and light-duty Silverado all heavy-duty. GMC go later the models. We along year of a will Flint new heavy-duty new

At key segment. GM well we delivered to Business impacted results year, hourly share this later the in also last employees, these in with have products employees we U.S. working and month. this outplacement employees with colleges will hiring expressed supporting be strong dealers profit plants placed in changing we will salaried early sharing which leads than growth success affected launched the by in Company take we in would you newly XXX announced portfolio success. I November. in it on and our success already year of the Chevrolet of to see consumer to preferences position workforce will the transformation a with XTX we transform would outline SUV the the to the business actions capacity Blazer. hourly provide eligible more in employee Canada, have product To-date, local we retraining employees. interest segment employers Cadillac said, update by encouraged like and North We’re of as sales a of U.S. as nearly minute XX through America services We payments who and new full long-term local in business are also with been experienced on for

have actions on international profitability. last level we GM announced year enterprise placed path a our to the operations, earlier Moving Korea to

a of remains However South the America share because macroeconomic despite concern continued pressures. Brazil, improved business in

and earned X an income billion having environment. the We last with business China, discussions are stakeholders challenging in equity to year key In increasingly market. generate productive acceptable returns in we

confident in and results this in China. While year, impact will industry long-term performance issues remain macro our flat we we position expect the

in stimulate roughly impact condition. be economy actions initiatives; had to growth to sales based industry the week, details announced and forward of and Last assessment XXXX on a line sector. market government expected report China generally levels these the we however, on our the the such with more about expect GDP the current on We and auto learning look industry positive

Through the the luxury to XX product technology. cadence expect brand Cadillac XTX generation This we’re and announce new introduced we Wuling be. month. that we aggressive every XXXX, restoring China of Cadillac. Cadillac, with we more it Last should it momentum design, continue SUV fully beautiful EV Last vehicles. months family last year new year in first month, through Our mention this of posted X from global committed continued introduced Chevrolet, electric Baojun record all to and at our and also and SUVs another we where our our leader lead refresh models I of than brands. GM's a new as including Buick, technology innovation growth will we global want the and roughly includes six be to model next sales Cadillac unveiled year,

than Honda emissions and billion raise from congestion capital in our with external XX announcing Cruise toward Turning and nearly a autonomous to vision our XXXX. leadership last X,XXX Softbank our real GM made future deeply mobility employees is and and of initiatives, resourced ago. to world in zero with electric both expanding zero in zero vehicles progress months crashes, we year more since succeed X first

We can of have partners willingness spend demonstrated with speed capital and with and our improve where partnership efficiency, common to development. a value work

Honda existing and builds For cell AV with fuel battery example, EV work. collaboration on our our

network collaboration we electric vehicles, largest On United the month, front collective announced EV encourage States. to EV in establish of greater partners acceptance the charging the consumer the to with three battery last

ecosystem on citing to entirety of the with last addition, the vehicle focus autonomous In the continues Cruise month. partnership DoorDash

offset by in had focused strong and segments fresh macro year. the we right recap, to cost We making So intensely headwinds another by of business with the decision earnings throughout product and volatile the staying environment. on year

over the call turn will I to now Dhivya. So

Dhivya Suryadevara

an automotive free exceeded and XXXX from everybody. Mary, cash good both and adjusted perspective. flow We Thanks, morning results EPS our expected

was Financial. to GM early that, With of North benefits We Our segments of savings quarter execution the cost the operating able execution performance quarter. actions by driven fourth results started these of see across America our fourth results more the and review let’s in strong to were record and our all including transformation in accelerate detail. in

and adjusted EPS generated As XXX Mary billion year billion free results mentioned, in billion net X.X adjusted adjusted flow. automotive X.X fourth of EBIT EBIT margin, of XX.X we diluted flow billion free margins, calendar adjusted, pension the EBIT excluding in impact adjusted and X.XX diluted X.X% in EPS X.X quarter, in we cash X% contribution. the in XX.X revenue, In revenue, net cash adjusted, adjusted billion automotive in billion in generated $X.XX in

and year, XX.X% changeover. downtime. generated North EBIT launch light-duty basis of North than delivered truck material new a pickup quarter offset XX X.X% strong performance to The North EBIT In full of X despite of up margin, America has headwinds commodity very for the over volume commodity points in turn the more margin our record full-size America. adjusted headwinds adjusted QX, Let's taken calendar and site year-over-year. cost and impact from billion Performance billion strong. pickup been X.X the America In results downtime all and

primarily over new of and favorably crew This in as smooth the during XX,XXX a QX well new consisting highly volume, down contributed ramp cab. the of quarter. trucks old sell as models price all of This the up to experienced profitability have reduced We model. mix

Let’s adjusted South move FX by EBIT International. America. year-over-year in GM XXX to year million was down Full headwinds GMI in driven primarily

record lower impacted Corp partially GMI of all-time results our fourth equity revenue quarter. and lower continued the was all-time a was We adjusted XX America GM offset elevated the factors note X.X GM Important growth. EBIT in the XXX full and GM comments mix QX by and posted for due levels down EBT billion Cadillac. equity down Financial quarter, cost billion of performance revenue few In there segments. million. and delivered GM income and in For billion. industry by million some income for income records record fourth of X as quarter fourth $XXX position, October, X.X China. both pressure, that on quarter adjusted South the quarter, of to of Financial, million Cruise the well year-over-year a the paid and for driven by market the as richer cost billion efficiencies still China pricing specific including XXX were million for as to In generated slowdown, result our strong XXX a million. Equity EBT adjusted in of year year headwinds A Financial of XXX Cadillac Financial dividend that to cost year-over-year of the launch and production

narrow costs dividends free our Financial continued cash to month, for earnings gap the long-term from and XXX between million were capability XXX last generation and I As an Cruise flow. opportunity QX. mentioned million year for and the provides strengthen GM cash

to expect spend segment were revaluation PSA full from million XXX including GM combined costs in Corp favorable XXXX. in XXX X warrants the approximately year approximately We of impact Cruise billion for investment. the segment and our million list

quarter, billion to quarter. the and in spend were PSA about performance unfavorable for be costs fourth were expect the $XXX segment In Corp We in by million to XXXX. impacted negative a Corp warrants sector

year. our the Before to calendar close, wanted I reiterate I outlook for

adjusted in automotive prepare headwinds, the as new of EPS range our last we cash downtime flow billion. free mentioned range the strong $X.X the tune XX,XXX launch in I and we take all of of $X.XX of As month, will to the we $X on Catching adjusted the full-size for to SUV. $X to units expect diluted

be equity China expect We moderately down income to year-over-year.

tariffs to of commodities and tune billion. see year-over-year headwinds expect the from We $X to

as between of provide from income approximately are items, The a specific the tailwinds XXXX. flow. billion, GM. and our they will reminder, of headwinds in in expected full to these Offsetting year earnings X mix and depreciation were these non-cash truck number be compressed gap are are and benefit since free and price volume, launch Finally pension to cash tailwinds a

the and of meaningful global vehicles. mentioned, family benefit from the of We XTX of year of Blazer, expect our full Cadillac a Mary as launch XTX and rollout

quarterly X.X in expect more expect on you adjacencies cost to It cadence, these offset first of expect high first billion most taken tailwinds we top the understand the year we the the margin XXXX, transformational this to to to quarter aftersales When also in downtime also similar be weakest and will a SUV of year-over-year through billion that, of savings layer macro-environment. like our headwinds, quarter. We than since be growth X assuming OnStar. the important is

in disciplined we lower by continued given reducing addition, pressure have inventory volumes levels. our industry China, will while In staying

year, and product with the improvements later actions following inventory see As through expect we in to in a we these the cadence progress income equity strong China launch year.

due quarter working flow a reminder capital cash to QX typically As is our weakest seasonality.

year this given I to downtime addition, In cash our meaningfully mentioned, that averages. flow is expected historical QX be just the SUV below

on flow move execution cash free will had to financial our For $X.X conversion, summary, finish opening of full in three January, a Q&A cost flow now year, after billion. the and will cash mentioned key however, I the our range call. best-in-class XXXX, and improve as the priorities we XXXX I portion our we cash mentioned and we solid full flow, and deployment. to in free year That stay earlier, we a to continue we of will expect and efficient capital $X concludes cash and focused as be in structure had the to to including billion comments improving In QX

Operator

first Murphy Our of from comes America. John Instructions] line Bank [Operator question the with of

John Murphy

the launch the comes there the when to sort think benefit in reach XX,XXX When launches, those am on you -- So real will tranches got actually and I lower the mean could to cadence then SUV I a follow-up about of of obviously of the finish throated the and there if contributing your will than post when start like truck. the you there, full when kind rate it duties run that’s those three you HD trucks? the expect the layer of curious, and just sounds you've in? question new through fourth but really for for quarter, ramp SOPs if truck light Dhivya. A go much

Dhivya Suryadevara

Sure, John.

volume and So, you full look is in transition at Wayne, if we’re over. up Fort already that and running

our downtime Silao, So, switch to now over if quarter, rate our we line is we’re for fourth you reproduction up taken have to where pickup. full in light-duty which

January, after production. to we’re up level of full As

So pretty our light we’re duties, much transition. with

production the ramping you see is and of when of been most full XXXX heavy-duty, the to through over switch you If in quarter we working have up changeover see, will second transition. after XXXX, of XXXX that we in for And starting on QX will heavy-duty.

and XX,XXX that the For about QX going more XXXX be for in to XXXX of for that in will have year mostly we’re downtime be take that later. SORP and SUVs, the talk the will to will

John Murphy

you what’s talk get gen Mary, Just talk might was something about on any update Cruise? a there on that maybe getting that us some obviously, with Cruise? a also could this if question, a year, with there's mean, fourth fleet bit launched if second going I you fleet, on little DOT word going whatsoever? delayed. on about And what’s the petition if on to And commercial could

Mary Barra

is there track capable three truck also for the four petition we the but level no our really with So, are word on vehicle, of model. very four, our launching

consistently communicating, going there. in safety we’re be is getting Cruise. think metrics the I So, good position for -- to we've as We been

focus got been out right just able and our shows so right technology. to people, X,XXX obviously doing at think and team whole what I ecosystem the there as we're moving we’re been -- hired have commitment well has work on the at we've as there We the to

vehicle make handle to we others struggling think last that that released continue progress just the our the shows can month with We that by the new as rapid with. video, evidenced are technology, that's I

very in I position. leading position, a a not we’re strong if So think

rapid So, we’re progress. make the continuing to

is we would We’re you the meet year, is to I in that safety regulatory going forward all to fashion. everything we as defined but say the make a critical well update this going we’re really positive to ourselves for a moving very and be important sure to and as requirements, appropriate going continue as we progress, thresholds

John Murphy

housekeeping, And of then think we I think when just in GMF dividends, was XXX just one about 'XX. sort lastly the it

earnings beyond? And XX XX flow how the addition So cash sort at what the and think balance is progression and we GMF? about of in as should growth the of sheet the and

Dhivya Suryadevara

is level would GMF So, which John, you're in now steady right. dividend than lower a is our The absolutely what potential. be at state

we long-term as is anything and that the XXXX And that that's XXXX that GMF will the be would and the you if we've to at billion, we our dividends, of we If we before for about much leverage a our will able assume to earnings range how where will likely the the dividend for rating but perspective. XXXX, we for tax expectation will once captive you that, would in post ultimately the in early agencies to that $X leverage expect fin-co look seen of how full level take a that's in to take we be going earnings there will maintaining the reach that's governed forward times to from after managerial that target our that taxes, But have between leverage would from be upside. of The net determined by dividends about say would GMF. outlook if And ratio our see we I ratio comparable developed. now that be way. with along move by ratio average XX potential ratio to out appropriate income apparent. we and and before be curve and of our dividend we we and And we of be communications above

John Murphy

say But get billion into size you run as it's fair to simply, want potential free that cash rate to? to GMF to X.X normalizes upside it flow its

Mary Barra

John. Thanks

Operator

question Lache Wolfe next of Rod with the comes Research. Our from line

Rod Lache

year-over-year be was address At we into truck how about are be you prices just are $X margin hoping you revenue right early we quarter should Is inflation, transaction and XXXX? the What aspect the now is in on that? in I trucks we updated one the convert towards expected the be. about, as you were from kind it think headwinds to you, One was the see you that one was of DNA, North for was to questions. on really this where all you fourth of despite that? obviously were launch. a thinking may old strong, so something point, and in it positive talked between of XXXX? Couple I billion your tracking opportunity commodity where up obviously average your you those view Are should America able higher truck you of

Dhivya Suryadevara

Sure.

wider into many capacity, had launch really position and say releasing our the talked we fixed generation with cab that say that with new a truck now the have from we've the So, also for remember, the been sort high-value, offering you with before would broader get years, and generation participate we we crew curve a had excited historically to within including and perspective, the have expanded versus we of we the trucks would that we about leadership constraints number that we truck even including edges in we're we where I that And that the which launches would expect of have. of to in current generation. really new well. continue if And platforms this prior Rod previous high-content, brand a have about with of -- we that, of the middle and the vehicles as I numbers,

that also So our that to together, you we starting easily run in duties QX of what see in were could as we see, put for trucks. see that you're going are have we're the pricing light saw and rate off QX And as them. to you you volume not all is, of started impact XXXX XXXX to already in transitioning going new mix as headwinds the well to

see continues will support to and dynamic you so this second of duties, volume SUVs similar would half the I benefit pricing be year, year of say favorable be of world. duties, as that Heavy the half it transition even a you up, and in this mix light year. see So continues of to

QX be the of for take for you looking light it duties would way that rate a So, in XXXX. to and run results at simple

Rod Lache

non-China $X.X Obviously, on be there some other there year. also improvement drag this South was was macro of is things you a can What last you are rest address contingent going drivers? like, GMI? I the are hoping is would billion expectations of some high-level in that it it America? Or part for the big and about to forward? Looks that your Korea expect

Dhivya Suryadevara

since business fact profitability. last American structure Yes, number if up pricing say actions at the then is we've important our to of make couple start for South the as and look progress future is to set South a because done in will of to FX to XXXX. of tends we it full-year of over going cost more size impact right But What business, taken was, a as a did in stakeholders, number with have the to breakeven know know, the you working peso. there will there. XXXX our there. you in specific FX know have real is, America a profit. you happened several, business more factors to And What in South and Brazilian are as to lag XXXX, priced and America, with the in the we've QX turned Argentine a of One the we story we and

basis. were we year last were them we a on lagged pricing for FX, experiencing as but So in headwinds

Capital month that the of architecture our portfolio of second the portfolio And replaces global legacy impact impact to Day. more see is see So in about the of and Markets end full-year the That of of you year, towards family the are is architecture. of vehicles, a we're going our aspect detail to we new that start last shared that in going is, the to numbers this a XXXX. in

an and more as portfolio cost of is the from footprints different where have perspective. profile the the portfolio well FX as the hedged we So, profile margin the to

to going impact you're see the to of So, start that.

in we based well, in on actions GMI. in see from America we've expect Korea taken with to year-over-year XXXX improvement South profitably and perspective So, those everything as a

Rod Lache

And just question. my last

related X kind a where the excluding X power to think billion free purposes to underlying billion about If free flow, we flow timing free understand X.X closer X.X to of cash cash payment largely Company. as billion to talked differences, of billion users supplier the to of X.X days. business and the in just really the you for flow X the go on I the about billion XXXX, You've bridging your were cash to forward which billion but Is think were is of basis? the generative it to

Dhivya Suryadevara

you was savings results our the the couple at billion of payments we excluding get timing how it through, Rod. get that CapEx a supplier billion think XXXX related It look of remaining will X.X and we I addressed, benefits remaining basically XXXX, of rate as half look billion production will to flow to savings, well. X.X current timing, beyond a a see will will the have timing and XXXX. savings run -- about the Yes, And going to in said changeover. our And are well XXXX as you our level get we total. X talked impact have X.X as the cost about as by with cost billion of a to --

changes, see tailwinds to and -- working current is if is well. nothing as but of the obviously, context that I for this the us going in assuming I'm of XXXX else takes of all you you You're am But and in puts XXXX. have giving and in what macro-environment that impact

Operator

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

Itay Michaeli

next on for how of you're the given a China, the the say Just quarters, years? first recent now couple few GM about China last over thinking challenges question margins in normalized

Mary Barra

electrified an as you Clearly, and and lower that move we be will a higher. gain if and then vehicles there is scale kind continue at, cross launching grow from and we their margins. takes of we to think I more transitioned to we perspective opportunity is over, there there look as more puts improve Cadillac think

China the go having margins So, of will transition through strong bit with on a we're still and EVs. focused

to of offset think Cadillac the growth that. SUVs some we will specifically of So, that and help our larger

Itay Michaeli

you're tariffs. of on that in and of get some tariffs your scenarios the component just a I for Love And items mentioned commodities to and thinking still assuming and thoughts of then, there? what we that are be outstanding billion Section out terms $X other think about should still some on XXX assumed you've the

Dhivya Suryadevara

Yes, Itay, specific here. components a I want on to volatile it's numbers so don’t pretty environment, put individual

some aluminum. and gone in changes seen has pullback steel You've and up Palladium it day-to-day.

that sourcing -- the do number. So factored into since XXX aluminum year, local, into that's individual as tends months. our have down year We tariff amount tariffs to a X of components. our for we is any I largely and the by break be we last And really don’t steel anticipate couple outlook our in the the wouldn’t billion where that said spot for components moving there and that's more are of lagged prices embedded

broader number we that in $X So a efficiencies during that XXXX a cost take can work and find XXXX. no that with we're offset other that's matured and to as shown going and so to efficiency, we've billion different

Operator

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

Joseph Spak

I some think I in out question D&A alluded Rod North the that that accelerated results? adjusted to of America, Was depreciation took to was think looks The North related America. higher like part the from some the then actions you quick in one of this. it and Just actually backed accelerated

Dhivya Suryadevara

a saw is flow talking as additional the component that The to part of walk. for form EBIT of cadence of D&A treated charge That's as one the our through our we of in good normal of D&A, a EBIT that and portion our was fixed Rod level, right. which The our overall in the adjusted. for is accelerated depreciation that transformation about special normalizing capital

results. continue well For results I as as the And in fourth the quarter calendar to impact year, well. as that it said as will impacted XXXX,

one Joe. normal in that. So, not that's accelerated D&A, the is The counted

Joseph Spak

Okay.

the X apples-to-apples of X $XXX the of it year-over-year? on includes million -- was so up accelerated America, an portion, so was up couple that a it So in roughly basis,

Dhivya Suryadevara

accelerated or are You normal… portion the the about talking

Joseph Spak

adjusted No. was an higher much the basis, On how D&A?

Dhivya Suryadevara

the billion the transformation of that we perspective, so say million X.X for of the billion D&A or took charge. XXX about about I with included would a from charge X.X year

And all So, the had if that's increase normalized majority say component If I year it, year-over-year transformation to a our the would basis, would at portion. not D&A. you on it the walk, vast that. look EBIT calendar fixed of a be attributed of

Joseph Spak

in The is real point we this as think. down path going

$X the XX, free billion, depreciation cash for Slide further billion as CapEx less narrow to think that that on your You we the 'XX. for walks relative year? CapEx showed flow guidance Does gap about $X

Mary Barra

Yes, the to think to that are X going you in are non-cash, in and coming additional billion see in pension a about bridges compression so would you going you income XXXX, from two I and X and depreciation of the have bar XXXX, decline are which the And that. billion way capital. first in additional will see depreciation pension of

come component I of be think this in, should pension to on that two that and be will that other that starts of of the So number as earlier dividend about. the top depreciation on top would when components. And John first asked about that's GMF,

Operator

line from question Our Colin next UBS. comes of with the Langan

Colin Langan

concessions There allow see unions X.X I a how closing? lot mean, some And plans. to that billion on pushback of a close the are the you risk, do the those is is at as risk? that if obviously don’t plans of much

Mary Barra

the been unallocated obviously are XXX X,XXX eligible, status. already I have I when I X,XXX are this negotiations, mentioned the look available, the announced that of about at and think our But X,XXX and retirement it's jobs have part people as important, need UAW plans of that placed. year the fact think workers to we as we you of we finalize impacted,

transition. as allowing obviously, make addressed worked workforce this And us need we from we we accomplish. XX% work we through perspective, at a what to a I that to improve at that to and to have perspective, think and can't the will look market way to when from we run but we that will do, do concerns had utilization, work to a go long a

X,XXX And jobs that's way we're especially and have where hiring. just to available look So, don’t announced with we Flint. in with the yesterday I see do people that to that have we at, the ability places I we risks from the

go So, UAW. to think solve transition it's we do we what to it's have with have and problem the I through,

Colin Langan

when the mean, share it's at product ends going mean, to what pickup? on them? more 'XX I about you gain followed up we are showed new assumption guidance, truck? more market new I And shift, look Or about it some data take share do your is expect of is that recent but months-to-months. you're Some the optimistic with to the pricing?

Dhivya Suryadevara

in which around XXs. recent past, volume would truck we I hover is low the mix the in say booked the expect of all the to priced penetration the as ranges above, has it that

We this. The an to cab expect us that important of going of forward. all continue component makes crew

I earlier, year, while second in both on of that As crew tailwind are associated the in and full Silao cab going the full still we year release capacity. the we to Wayne Fort Fort crew the with with and saw constraint we a calendar see of mentioned year, running out at Wayne, the cab full half impact

Colin Langan

Got it.

the So market I until recent be not guess, with are answer? -- year they the would share up, short are showing that that next changes

Dhivya Suryadevara

extrapolate wouldn't one point I from data Yes, Colin.

Colin Langan

industry? is lastly, still lot -- is concern just color your where there of it. guess, high Got on that inventories, I a across any the And China inventory in

Dhivya Suryadevara

XXX,XXX to actions I say units QX QX. overall Yes, in in in right our levels. size about would production out We production took we've of taken China

to higher XXXX. that in is than working X we take of you QX in the again touch action operates well. continue level in If a we is XX SGMW picture, to at X target a days typically around of XX that on to to which above and look QX inventory SGM, we and that's the would that, tier like, cities, further at inventory. as is more be we're have to that overall

I talk seasonal the being it So the my and to that. in I in as factors QX when about well, remarks, inventory alluded cadence the low actions China right-sizing within

Colin Langan

Got right. my All question. it. you very taking much Thank for

Dhivya Suryadevara

Sure.

Operator

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

David Tamberrino

Great.

first normalized for as production JV am outside on main run million comments, wholesales, step there? in throughout the year, shutdown you're in of the Let's it -- stay but these sounds a wondering wholesale moment. to some quarter, and in down rate fourth tea expecting the the take $XXX Trying then China shipments, the to your you the to from should income getting and actions it as quarter what's just improve driver and your leaves inventory like I sequentially read the take

Dhivya Suryadevara

Yes.

QX. it I we're production QX in take note, not think QX we from and they would new XX would actions. QX. I perspective inventory about say And going QX, to took to them the I QX, that as would earlier, a a talked down well. from to similar in assume step launches take and important it's in are Firstly, continue taking we're QX to that them We

year. are actions would So that specific in to the of half I really take effect to say, latter us, the starts

perspective cadence the then and say, that. overall macro after from So with over there. QX China the picture would on up I pick well in expect But as obviously to a QX, sales environment levels similar-ish eye as an

David Tamberrino

a the I operations, acquisition then as really network? And one people spend are into answered analyst that looking necessarily below a costs your that ramp what bit of kind should year. getting more tone-shift perspective, was into it tone-shift AV of of little contemplating XXXX. on should billion $X as wasn't your use were not, want a It at a question; in Got read it. that for another customer two, or back target anything That's increased later a But anything that there signaling seemed spend, ride-hailing for that Dhivya. for? expect question, in here? asked you you to understand helpful, spend Are type if squishy, from Is there earlier, deployment to a if you if we And well I deployment at then billion that? term. toward XXXX well the can with Cruise the

Mary Barra

he turned spends David, say we're leader is, like dollar one every lower of not it's squishy for -- excellent be at our all XXXX and AV lower plan spend an his I and would Kyle is reasons to is the for out manager own. the Cruise. on it in Vogt

good to in year. and we Cruise spend So GM cost expect there's set that incredibly saw controls this out,

that's I just discipline. good cost So think

that we're positioned. As biggest this committed. time. of We're I I technical challenges one -- really But think said is the of well our

forward need, additional every they and resource come provide and resources, need they if We those. ready say we stand to we have

position strong in it's funding. a So I from think

we're standards I think -- will about, the And to to to aggressive keep a year. I ourselves But the what the to we've to hold so we at do, that going you the and video strong talked safety pace. the as regulatory we've it's we're the we're moving development. front from But position, going and on-track and work a set. do to vehicle as reference posted on is committed very continue in that yes, we again, now we're we're able continue performance throughout think well, that to

David Tamberrino

billion within $XXX XXXX a just…? just this $XXX XXXX, $XXX saves. did target it, I in And understand that, came was about Are million maybe spend I'm similar year, for in you of expecting you $X some you low, your cost million your Okay. guidance, million level, missing

Dhivya Suryadevara

Our guidance XXXX GM Cruise for approximately for billion. is $X

Operator

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

Adam Jonas

Two quick questions.

a sell do GM margin First, think EBIT roughly? when for positive can you EVs

Mary Barra

about we've want development, generation Adam, desirable, talked we range. So next appropriate of have fact to you we obtainable, sure make the our with that and profitable, with to the that

situation well. position is that the have we have from as that the to there. work Honda we're the partnership fact so know, leverage think, China, that technology we with as a to Also that the important in will you benefit strong We regulatory and the I we drive doing. And note

is a from So that I stated cell think quality family position, perspective, we're of that vehicles. also in costs our next goal a we our when and down, driving launch good

Adam Jonas

Okay.

if post wrong. interpreting maybe XXXX, that kind me XXXX, I'm of I'm correct as So

an you and what either of for E-Silverado? for think GM all-electric pickup or question you is if Mary, Second, he will sell when Mark do truck an on,

Mary Barra

correct, say is, think any early than all future. say put you're believe would I'll profitability And I So, we more wouldn't your EV said, EV I but second that. on an wrong. you if question on in specificity next decade, I

tuned. So stay to you'll have

Adam Jonas

you. will. Thank We

Operator

Brinkman the Ryan comes line of from next question Our with JP Morgan.

Ryan Brinkman

I outside China of thought to ask on GM is. International progress that restructuring

that are provide XQ plants there announcement Any in think sometime XXXX outside should the restructuring close can an last back your on slated in update but time? international how year, savings, you Korea, Also Korea investors can announced the XXXX, would since provide how I progresses? you South included those update So you they think as to two call were America. on there of These with in perhaps November. about the and were progress unnamed, rate us in presumably the cadence restructuring

Mary Barra

China a more back there. already South and has not seeing Obviously, on look GMI, also of a period and our was time. there difficult at America. is I would Dhivya track, broadly we're I step pickup Korea addressed including that would say restructuring and share in

of last So we're profitability business, the say announced under to still we implement is would that the actions I to right work have is doing work that all we size year. solid continue that region plan a and around there way. that to

you announced have to color So -- I I But want anything track. plants more have to Dhivya, add. any we're don't with if additional definitely And on add don't specific two what there? we you is the know,

Dhivya Suryadevara

the well. cost contemplate right savings cadence I that outlined as would XXXX, just that for we for have these the plants say

in. baked all it's So

Ryan Brinkman

continues with the but about headwind, GEM prevailing should fairly drivers XXXX you the Argentine platform, GMI. think to Seemingly It lastly, how peso hedges And $XXX the have? spot might and then a be progresses? in like your this any biggest to on Based that currency then as looks prices, sticking regard with trend million there. large localization quarter. plans the the real, And we

Dhivya Suryadevara

to been I elections real averages. has say would perspective. But Brazil the historical relative elevated obviously stabilization from there in post a some Yes, Brazilian remains

anything and the Brazil way in to Argentina. wouldn't and you be headwinds in of pricing that might take about There but kind the of of able to we're ability. inflation line in through Brazil, we think and your FX -- FX think than is, I I Argentina with Argentina into think price factor typically as other months a lag, few headwinds last future Ryan, pass

think localized. necessarily perspective. localization at more the will I in turn these have our hedges And from all don't be wouldn't to we're as FX earlier, generation I the mentioned areas. objective more to of next would we pricing that be and with it on even extreme we of I as able and FX. an look levels the localization, levers and X So, it primary vehicles But profit at management taking, of actions forwards breakeven a is use

to work it. continuing So on we're

Operator

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

Brian Johnson

few questions GM Financial. a Yes. I around want ask to

performance of to from full expand margin net or bps. versus to other performance that you I residual seemed bps due over maybe how to Could saves? look year versus First, if XXXX XXX ROA much was at like credit dimension lease interest XXXX, factors cost XXX

Dhivya Suryadevara

in captive at year-over-year would as they to you I if continue from EBT will, if say, bridge, you half full Yes, look overall GMF grow increase it levels. volumes to

residual were their So so two. getting half from is versus delta, just XXXX overall that, higher their divide penetration in getting take other Brian by the that flat the the fact volume and and values XXXX, higher and coming

Brian Johnson

Okay.

the it's $X was of year? be of of quarter year you've that increase a your run as forecasts to question, billion to right second about implying used ROA of line have pricing talked So the factor XXXX rate given down, billion main perhaps about and be would flattish, sort you $X.X EBIT, residuals. gets in Are full the or kind gains been with car the Which mature residual come next would that. even going down fourth

Dhivya Suryadevara

decline spread to over matures, as values, well, a base. our I'd able XXXX, the flat the expect longer X% offset a will term And we aspect larger as other to say and you're to in continued XXXX business I be OpEx which expecting the asset Brian, penetration. the we're that in volume growth X% residual by mentioned

well see So OpEx we forward. move as should we as efficiencies

Brian Johnson

just upping And committing payout ratio is Okay. grow you're XXX% why the yet? the not to the need asset to the full to base

Dhivya Suryadevara

correct. That's

around tail million So years, several our in is in the the asset would $XX -- of see would next that $XXX off range. base north that probably current We billion.

of equity are that amount holding remaining to now that So the is the we support growth. in fin-co

Brian Johnson

more able headwinds few, extent China. question seems strategic And XX% final to Buick of XQ support, your about A room market? versus around offset is of there And end, mix is credit what the to buyers? retail in just penetrate kind questions; in the think penetration, the some impressive. lower which further China, use to profile Financial is -- At to that of Cadillac, the the you then the and as of the GM mix you that up least upper are in to second, vehicle the with given Chinese market better the -- JV

Dhivya Suryadevara

joint you, I'd from say first for venture. certainly to SAIC-GMAC room perspective growth a question, there's

the whether on board, in to the its early be financing China, board, there adjacencies portfolio so still GMF early are would the is in its stages the infancy, We say, of more would growth I it's others. longer term. had across And the in and of over and also say, leasing of, at which stages development after across I penetration are sales,

specifically tier those. from Cadillac tilted X growing than vehicle continue market. perhaps market, toward tier on the But draw And versus to other will X I we trends tier brands. perspective, more to wouldn't So, mix tier X a the X

Operator

next Our with the Rosner Deutsche Bank. line question comes of from Emmanuel

Emmanuel Rosner

assume first Wanted from beyond of hit comments the of for that quarter. to you the earnings as restructuring your also of -- benefits cadence the and the some some the it your these year, when on cadence of part actions, this about some is maybe of expected I ask benefits

year? for can that about expected about $X.X $X in terms you throughout us this should of So talk it year, the progression we billion benefit to billion maybe think how

Dhivya Suryadevara

I'd Yes, off start. we're say to pretty good a

As started mentioned XXXX, be the toward And we to of see I of tilted part early these the calendar comments, earlier flow year QX, through. year. in more savings at already you if look will starting the to signs my savings

a start after here good QX. be to will off we So pretty

the implemented, see we benefits. say when to QX start will I'd onwards, QX is So you

Emmanuel Rosner

was or Day. be about there room, your -- Markets shake like $X even some after dividend, It big I is this years? your future come was and XXXX could financing, it I for out year. there restructuring And feels it some a $X.X Okay, more I then priority question, thoughts the to common around or transition you opportunity billion in achieve don't as on like curious and there billion do some doing the is I a guess -- understand. would depending the Is Capital But around second you a think buybacks feels to some if focus the year, a buyback. guidance, viewed where that priority on

Mary Barra

investment opportunity opportunities Yes, as business we're point, grade to that return, going well framework XX% looking to committed invest there stay of balance a to very to as in an at that we the shareholders. as allocation maintaining to continue than our sheet. generate is capital greater will And be get to to then, returned

than say So I to have anything we're specific to our other going don't process. follow

Emmanuel Rosner

perhaps I And been year, then seeing curious have guidance in may for as when terms think fairly I given, flat seen guess, Obviously you're Okay. finally, assuming what was the latest just optimistic. the market you're of and a data which China. in trends

there Now most sort in of stabilization. to be early to or throughout you of any say, Chinese bit is Are like terms a to going the is seeing it too little think data of market? recent the that of January point seemed

Mary Barra

No.

costs very optimistic, a focused but days, have month the we're we've the seen And seeing early think is it's and the announced, that positive we're again, impact. because improving of only from seen but from government what improvements not has etc. team QX. in I I mean January, also, we've what mix, then there on

lot I'll the the see opportunity. with with say, signs from saw an we GM January and a industry lot perspective, also we see have specific new of, we of, So a in we opportunity launches,

Emmanuel Rosner

on finally, guess just still China. I very And

benefit guidance a mean, would about some of income? in that, speaking So not new we modest assume necessarily QX, equity like in market. have I about any I potentially sort QX, you stabilization it should the beyond the of you're and from worse then products your decline how the think for seems then some than

that's or of strong are last year? throughout a sort is it mathematically year, to anything else really you like is expect thus the lapping So headwind there some -- very quarters

Dhivya Suryadevara

expect beyond headwinds wouldn't Day. Markets to say Capital at there's I what we shared

we're and and -- regions a income intent it's when our results it's in and a calendar North note strong on. equity perspective. that, still say company post so to will factoring puts lower different important in takes I America, we there be from these moderately intent think between to China all year, our and It's

I one the the get that's So is as I We end day, It that. Mary more over on at specific do market specific that a volatile any on help wouldn't expect versus the going wouldn't train of company to other. us. there's factors mentioned,

Operator

with from comes Chris McNally Evercore. last of Our question the line

Chris McNally

Hi.

call. as so attack cadence caller, on way. a North American time Maybe they in Just appreciate different getting the can slightly First on this the I EBIT say,

low, clear, cadence the think and I the production of cost the have that you guys QX is been saves year. across shutdown, we

may that the would Is investors extraordinary in given second if peak. I that launch sort sort half. about, have there think would some the any and questions around SUVs? another QX of we should are the beats of cost the think Because duty of the cadence, of the heavy not, as you you think

any across there that the to should better is of the that sort So benefit year? you've offset laid get out,

Dhivya Suryadevara

North factors year, anything you downtime should I of I discussed. mentioned, nothing and depreciation here. several through that's that should But there talked on results. but already related that talked going with on even costs just year. the going pension in don't There commodity about headwinds, the positively that and America, launch haven't that does all about beyond whole depending to next We on quarters I'd down North what is weigh how about, the haven't commodities behave we second impact the half impact any talked we say, had QX already the was American and think the that income or specific

Chris McNally

And over the some levels of I those it the you've we of that let's are hedges, be had greatest costs could obviously me quarters, project make obviously, on the annualizing first Is of if actually would call and we for the actually quarters. just are a six It you one these end surprised to spot year? last as four the of possible spot year, when to timing know, full mean $X talked in the there be six from, the being bit, follow-up it sort see tariffs, I year, sense billion by, about continue of it quarter of of months, benefit of from commodities little hits the that still prices so out, half. sometimes with know the anywhere the could a some you that lag first some

Dhivya Suryadevara

when commodities. talked in say, Yes. three really when is The it's I statement month that spot to down. actual our or it. would I up of on in We the index cadence And about typically lag experience specific a our impact income prices call the the up difficult versus go -- shows lag

well through this moves I'd quarter. and up you year. As entire know distributed evenly say every the down

up going as XXX are closely, down within that the tariffs We current and will impact, watching very you of need commodities are which also say, at the the look to environment, an obviously because well. and have market I'd mix

difficult any to provide topic specificity it's that is So more volatile. on inherently a pretty

Operator

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

Mary Barra

thanks Well, you. Thank today. everybody participating for

that continuing we strengthen business, of in of as our As transformation, know are personal we you as to phase accelerate core next our to the the to future to the mobility. I committed well work begin continue lead to want

trying many one competitors industry. believe And we we to all differentiated a position company. all We this was -- are repositioning and very really strategic, of in things all to are in the be very what people company, markets, a agile to profitable than that from in this

act across in the reinventing dynamic owners, the and -- on capitalizing deliver have shareholders. continue by on made to future. personal making our win world will with global create the profitable driving more only businesses, are commitments that performance you will growth that business we with the to on vehicle and that $X the but our continue term short capitalizing we XXXX, integrity, our better will intent discipline you, to our business today, term portfolio, long We transformation to very strong opportunity safer, on but and commitment, not focused on transportation, we to in we've we adjacent sustainable. with need In the our and drive and stay trillion our value speed, will This for to be on

your So for thanks again time.

Operator

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

General Motors (GM) 6 Feb 192018 Q4 Earnings call transcript