GM - Earnings call transcript Q2 2019 | General Motors Company

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Operator

Ladies and gentlemen welcome to the General Motors Company Second Quarter 2019 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 call is being recorded Thursday August 1st, 2019.

I would now like to turn the conference over to Rocky Gupta, Treasurer and Vice President of Investor Relations.

Rocky Gupta

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

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

this are via We call webcast. broadcasting also

Executive of today GM's other Mary Executives. Dhivya by CFO, and joined GM's Chairman President I'm CEO; and and Barra, Suryadevara, Vice a number

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

call I will now to turn the over Barra. Mary

Mary Barra

Rocky delivered adjusted adjusted adjusted in for of joining our net revenue Thanks a cash XX.X% North free of the results X.X%, and everybody. $X quarter margin in solid automotive strength of of the ROIC EBIT $XX.X flow achieved trailing adjusted good and basis. of EBIT second a of our of morning $X.XX, we call. and Overall, Thanks billion, diluted performance EPS adjusted We four-quarter on $X.X America. billion, billion,

launch heavy-duty and ahead consumer transformation offset along full-size planned for effects trucks, SUVs, demand industry and helped China. drove in crossovers, This of the with actions our our company's Strong of weakness profitability. the business downtime

our of year new strength crossovers family entries second as We and improves global the expect as the launch vehicles. launch we to our our of availability half in continue and heavy-duty truck from new

turbodiesel of we'll fuel delivers records to the sales crossover average year-over-year that Silverado and our begin highway share transaction per America, North thanks quarter, up quarter gallon. best-in-class economy all-new an part optional XXXX Later growing at XX improved for this delivering deliveries. miles Duramax with and Looking engine in to and second results truck prices

deliveries generation of than of clear in up with competitors. year-over-year with segment incentives our the large models those lower XX% current leadership continued GM's SUV

We to contributing profitability. also our in well performed crossover segments

to car begin California by of Corvette of XXX,XXX. Stingray a models production sports dealers mid-engine all-new We the nearly in the two increase We plan weeks and ago highly XXXX shipping anticipated end year. iconic to global unveiled the the to audience this of

Looking brand's in to globally. than XTX now SUV vehicles model quarter. the XXX,XXX The luxury sold the further seven-passenger continues North position be The China, the on the Cadillac, high-growth XTX best-selling crossover America at new worldwide in brand strengthening sale and in segment. more Cadillac's is during

brings In us the have official to is XTX U.S., the brand. media interest new its XTX feedback. the strong off Dealers very start given of and a to good the ahead And launch.

is expanding assistance Super U.S. range the and Canada. the its functionality Cadillac also of Cruise technology driver and hands-free in

said highway. vehicle owners adding a CTX vehicle year-end equipped XX,XXX for miles CTX will operate than divided be Cruise XX% on prefer More Super only consideration, of of with able are current XXX,XXX We would they miles By to highway. of Cruise. compatible owners future or Super that consider

products. would opportunities details provide will Dhivya employees offering at unallocated that plants to our I the additional U.S. on hourly toward transformation progress actions to But like update shortly. relocation have business you on

a accepted more place every actively job employees into for plants X,XXX employee. transfers positions. employees the of To-date have open is working to segments There growth impacted X,XXX are we supporting and to about

include in regulatory slower operations, China GM at resulted of As pressure, in pricing changes, volumes, industry. China, economic headwinds we and look customer models, our preferences. in lower has softer our international sales outgoing quarter a continued slowdown significant shifting the the

half. be see these the we Even QX with in and generally the launch of continuing. first as the in we line half many expect dynamics Therefore, of income vehicles will we equity QX, second new in year

sales leadership work and In XX South capitalize on Chevrolet's turn years the America, to our the around business with we of continue region. to stakeholders in

to taking self-driving our we're strides to are strengthen an toward future. of business, addition all-electric making the we our core actions important vision also In

our fully also systems, recently chassis enables cybersecurity updates receive in platform the software will more vehicle and and systems systems; protection, deliver controls, electric platform our propulsion that advanced Cruise digital This vehicle customers. a revealed and new Super to This will value We including technology. convenience over-the-air to integrate Active telematics, more. Safety

its Following to our Stingray Chevrolet CTX Cadillac on will debut XXXX lineup the and expand XXXX. it global of Corvette by the most

and are charging drive acceptance of addressing about concerns EVs greater to customer working availability. We also by their range

announcements In we've with owners platform links addition of that charging made GM-approved systems. we've infrastructure Qmerit EV an home partnered to with earlier online installers

group investment a an $XXX of Cruise. equity Cruise now a Cruise billion. investors General Price and Rowe million to These and In existing including accounts by SoftBank and from $X.X from institutional investments investment T. value additional billion Turning Motors. of Honda $XX at May secured partners and funds

that be We only by at will have the said benefit realized from massive beginning safely self-driving vehicles the of scale. deploying and

the expanded in development just building has to General necessary It For with do focused workforce, and and achieved Cruise integration testing years, creating been one on most of raised the environments. its the blocks urban that. deep past Motors four in billions capital, has complex

suburban toward recently EVs of XX setting. an all-electric steps have are conditions large-scale in more than times where driving challenging deployment in They San took Francisco the

community driven. second safety significantly increase and Cruise half this of miles and will also and accelerate infrastructure to the fleet testing number increase of validation the of scale build-out. engagement EV its will continue In its Cruise year,

intend And General Motors next-generation addition, developing leadership our engineers need we exactly successfully need win we become hundreds Honda validation. what software do. race leverages build we purpose-built consumers. deploy to the a to that It clear only that trust hardware and integration to Cruise scale and and related safety are and is tech talented but of that with to has not AV In at

we business So of power truck transformation. our delivered begin to full-size solid as to ongoing the recap, demonstrate quarter we our a and earnings

automotive free to cash year and that We flow to $X share are $X to committed outlook billion our per of of earnings $X.X full billion. includes $X.XX

and you then Dhivya will now your questions. take details we'll give more

Dhivya Suryadevara

and in and adjusted; results good flow. generated diluted from We QX $X.X billion adjusted $X.XX X.X% in $X.XX billion billion includes morning in net diluted cash Mary $X everybody. revenue, revaluations. loss Lyft EPS our The of $XX.X automotive margin, adjusted and EPS free EBIT adjusted, PSA Thanks, a $X.XX

pickup delivered to offset of income light-duty North to Let's in margin crossover $X lower America. go and downtime actions. performance our cost EBIT QX by performance, increased billion for America by impact depreciation. truck adjusted North was pension and This and XX.X% the driven planned heavy-duty trucks, partially our

favorably The light-duty contributed to volume truck and performance quarter. the price during mix

additional franchise stages into of power complete earnings the in for we're the early demonstrating of and the as we launch opportunity heavy-duty upside trucks year next mentioned see of and full-size Mary the the the As of leading our truck launch SUVs. looking

cadence the light-duty on crew similar focusing a cabs, follow will cab trucks the truck models. followed by the heavy-duty regular first the as launch, then double, The and

the were and dealers. crew models second light-duty cabs GMC as to double quarter Retail shift straight Chevy sales Silverado additional for Sierra digits of up the to new we continue

share $XX,XXX launch share use pickup The highest QX growth of trucks nearly points the concentrated our thoughtful retail over average this a improved of We've a and from percentage three to very the incentives disciplined done with strategy light-duty with price market of segment. industry. transaction in XX.X%, the

high the expect share And value cab in volume the QX, rollout retail the crew increase. continue We have in high market share we as of and we to segment. truck light-duty in leading the and QX

share opportunity see launch improvement, also later and this into year. we fleet diesel We as business tap for models profitable

crossover in crossovers Switching performed the We're QX a the our market to to share growing crossovers, well gaining with deliveries seeing U.S. contribution are quarter segment record. in positive year-over-year, profitability. XX% year-over-year and

crossover portfolio by we increased our than our and from income transformational the revealed May. will Trailblazer, XXXX with were expanding depreciation GX Encore cost Cost savings. offset We keep pension XXXX lower in pressures more and which

Let's move to GM International.

quarter, partially impact lower was income year-over-year, in and second $XXX down EBIT-adjusted restructuring the America. in Korea favorable in driven million continued offset South For business actions China, actions by equity in from improvement GMI by the

the In from levels. the further China, to in transition experienced in record QX emission China QX VI V income pricing many Industry disruption from $XXX from pressures in early million equity deteriorated pricing XXXX down China QX significant requirements provinces. and including market was China year-over-year

by more year-over-year. XX% headwinds retail XX% by approximately XX% reduced These continued in with QX down volume which approximately production inventory material offset by offset sales partially and and We were production year-over-year, than performance. dealer and wholesale cost other

we ongoing to In these vehicle the headwinds year, the expect partially offset by of launches. half second be

As a year result, XXXX. we the half be expect with equity of first income in line of the second in generally half to

despite with other turnaround savings, the South continue business We're our region. stakeholders. volatility result of see actions to together that cost starting In we're in improvement the of undertaking business to as the make a we with progress America,

operations. share, South America in We dealer have efficient a with strong network strong and manufacturing market leading franchise

competitive family as deliver as improvement through launch the of the and vehicles of see we ramp to our for expect We progress stronger of vehicles. portfolio remainder global the more year we a

on A $XXX quarter, in Corp GM of full the for result for billion $X.X second revenue growth. Cruise communicated as of the record EBT-adjusted billion headcount. our quarterly few comments year as previously million of approximately a GM costs and segment. million, Financial on increase quarter $X portfolio and our Financial, the primarily $XXX Cruise were we posted track the with

approximately last investments the in quarter million $XX in million $XXX unfavorable a of in from our the quarter approximately quarter -- due loss million were costs million gain and segment year second second this of PSA Corp and year-over-year of to $XXX $XXX second Lyft year. the

expect segment We be billion to about the continue $X Corp underlying in to XXXX. the spend in

was second in quarter. made cost year-to-date transformational billion achieving have significant $X.X our progress savings the which million We in savings, $XXX on of initiative

headwinds our reiterate outlined takes of At and in I calendar for weakness downtime, of the we a Before including from in to depreciation, the the close, China. and beginning outlook puts want number commodity I outlook year. pension, our year,

discussed transformational rollout meaningful savings $X.X truck in the of to billion growth side, On adjacencies a billion benefit and we from year crossovers of of the XXXX, launch our and of vehicles. in the benefit full tailwind $X family our global cost

and continued weakness and have from is January, headwind Since by we South which tariffs. favorability communicated in offset commodity in to $X previously billion America, volatility China year-over-year experienced our

$X reiterating EPS-adjusted in automotive we outlook and of billion adjusted $X, flow to are cash the $X.XX free with billion. range the Therefore, of our in $X.X range to

included mentioned in performance not impact As investments zero investments Lyft assumes outlook is these before, this our or And PSA. our I any in guidance. from from have

the second second past QX. flow this half as number Regarding in performance the in XXXX, stronger from a strong second perspective be well summary, And we EBIT solid of the both downtime performance as of in the well sets and In America. for in free cycling half. had meaningfully due up year us North the an half expect in we to cadence to launches cash

comments, This concludes Q&A portion to the opening and now the move the call. we'll of

Question-and-Answer Session

Operator

from the Wolfe Research. of question first Thank your [Operator line Rod you Instructions] And Lache,

Rod Lache

Good morning, everybody.

Mary Barra

Good morning.

Rod Lache

a Had questions guidance. about the few

full of is of cash guidance first to free was There all, $X.X Just year $X half the a billion. for billion. flow burn $X.X first billion

$X And to we billion we're billion kind rate flow we do billion about run should capital, sounds free something math account excluding billion, ex that math? into maybe $X.X point? cash know extrapolate the taking right implies working or $X if in to can billion that we to free that if a seasonality kind annualized else cash of So of back associated there And that right that $X $X.X is imply doing at this Or is some working that's question to be billion which $X.X flow is to half. capital would if our wanted my from you.

Dhivya Suryadevara

thanks Yes And directionally, think correct. you're I Rod.

that As experience you the from the provide want EBIT trends And year by as I'll puts second to perspective XXXX and takes. give guidance are but a past working to extrapolating, going half well don't free I the cash these as to think improvement we're about as flow driven beyond we rewind cycled have be you of capital the the going downtime.

offset our recall, are see XXXX. to truck also cost into as that flow benefits about to equity tailwind lower through We're remaining by you from see continue launch. in spend talked XXXX capital flowing dividends partially going we We into income China well may savings going as from the And to our XXXX.

well you caution the half of as I'd some mentioned extrapolating though first fact, working half some as that timing items payments directionally in two In like second second But the do year I'd say lumped the in correct. can't second first takes times half really half. you puts are of and the at and it looking the you're half there off versus the are capital you

Rod Lache

And Great. Okay. –

Dhivya Suryadevara

you're we And say going into forward intense to of heard go in as beginning cash the also and here. XXXX XXXX beyond us have – that see cash Rod as year, focus us the you you an we conversion. continue on reiterate And flow we go as to

Rod Lache

get are of that's lumped those that on to Yeah. helpful reasonable like – think low-end of first you back unusual in about how CapEx year. Is half, about which this assume China color generally sounds to half your did it being included a to the your towards into the that. China? It dividends comment release What's from payments And comes the some guidance? the in bit little timing

Dhivya Suryadevara

AP out tend time. number typically the the We than and last a timing flow not have of of you perspective quarter that second would as AR more at perspective year. a well and this next the will happens through been pay yet from year between has it dividends from we first from remaining so that as And as seasonal and know payments in year we distribute rewind say year to a it's the first received evenly half China

two China similar So XXXX would those you of that And expect, will I can XXXX. dividend in about. adjustments cadence are I'd kind primary again you the probably in think say, a as

Rod Lache

Okay.

Dhivya Suryadevara

yeah, of billion $X And to standpoint from $X I'd CapEx from a CapEx say a a gave we range billion. standpoint,

point there's to year. wouldn't I among this We And timing quarters. in that. read too that into the will do continue of much the Obviously middle between at

Rod Lache

significant least quarter expectations Okay. half for what China, broadly second half the correction. you talk about a with the the included the lastly you're about inventory your half. is for first situation And inventory talking flat being you? just But just that And at first in can

the what's takes look are like and the business for And you? puts there? some what underlying So of

Dhivya Suryadevara

Yeah. Sure.

driven pull-ahead China There But we XX,XXX we've unwind obviously, we comments cycled in and so is of transition, pricing to Mary did So standpoint, so some as an eye inventory something think her industry did pressures or a keep unwind got more experienced XX% China That's to on. the quarter. We mentioned the that. we've by our likely and just from just we as the of pricing VI know transition. units inventory again And past have about don't second in been watch V yet. QX. in this to about

two-thirds crossovers. half coming uncertain of the the have our year, the launches we an the the segments slightly as look offset of into but So, that environment, second significant we launches by sweet-spot a price weaker really industry into with of launches from

continue macro. from positives the all So we We're expect. keeping a on an launch eye perspective to

Rod Lache

you. Thank Great.

Operator

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

Ryan Brinkman

Hi. my Thanks on for Congrats taking question. the quarter.

Dhivya Suryadevara

Thank you.

Mary Barra

Thank you.

Ryan Brinkman

softer moderation You the China expected profit on know, clearly your first some outlook was half. in the volumes given

calling Just drawdown et introduction half curious looking the in industry lineup you of some the the I cetera. front ahead back a company-specific cycle could think the platform inventory VI. would of forward the GEM including maybe in too are previously half. though higher Because catalysts you China in freshened versus of past deterioration if for back were half profits the some in you sequential now for a for QX

there XH back profit that the to flat in visibility I XH could think in you is half? do sales the you there if industry So in know. manage low But versus were higher a market China in environment

Mary Barra

as very are as specific I in are And But models China a some is Dhivya think intense know to that's launches well through. have pricing segments. we pressure intense that that move the the carry that saw we important then really GM with to how preference the these seeing with said popular one from as we going older the element. V customer because shifting pricing don't we

we're to volatility its think all hard it's that with say now. just right facing I the -- Ryan So too

it's it's team We have also every for cost with and And a possibly there that continue marketplace. at to We'll our opportunities very China at the downs is I then team predict. just to would single performance to good increase or But in as seize very closely you is first that -- to to very look working hard that. are looking ups opportunity. focused saw and tell too we're that partner we the the half.

Ryan Brinkman

power new then right? Thanks. heavy-duty lost to there SUVs on full launched. haven't truck during versions clearly the me display still But changeover on lastly platform just it Because full-size display earnings production Okay. XQ. in the the in the quarter wasn't of for And the was the was

the what sort of yet So SUVs bigger the better with diesels what relative of to program and sketch-out to higher-efficiency help you et in various pieces? this Navistar has kind display the understand us launched, potential magnitude of potential earnings pickups has of was launch quarter on can those even the profit of cetera what

Dhivya Suryadevara

is half you say, And quarter think cabs crew first the really about. started is fourth and talked when we double. I'd Ryan normalize to third the towards if so that quarter we going second or it's going the an with regular the the quarter Mary rest about as factor remaining light-duty and to variants Yes, out whether start into of diesel out. pointed you're see And important

excited that up and We're next going to QX heavy-duty. coming that's followed the in time and be frame about by

If half downtime light-duty against took about to offset power XXXXX or we an you that in units first think heavy-duty earnings point so we your of saw. the year the was the about of which

not you're year. of the to that half going in second the see So

past on additional we have that still in both have and the start years for we added to fact heavy-duties with volume and here. tailwinds light-duties been few from the been capacity have to as we quarters you're And see these going constrained because in

start so you'll variants far would as obviously benefit the obviously and plus the that downtime as the into and HD SUVs including mix see price going seen in the year we light-duty other and to absence crew have next in that variants of well be side cab. remaining heavy-duty So diesel the

Ryan Brinkman

you. helpful. Very Thank

Operator

Lynch. Bank Merrill the America John Murphy from of with comes question next of line Our

John Murphy

Good morning, everybody.

wanted really got the make followed Just up that correctly I Dhivya side. on to sure truck and

first downtime. intro the So had is benefit third quarter. next quarter, back pickups half in in HD first of SUV the basically year. bounces the then The will you us the HD but and some fourth quarter in in downtime in the or And the mostly the SUV time the second

So well it's $X.X gets looks per like north out. once all these this it worked of truck quarter something with swing I billion mean,

Dhivya Suryadevara

cadence the say is right. you've I'd roughly Yes. gotten that

terms about see directionally in not the talked early the we next have year. of I will will to think that But timing start We It half correct the in the second specifically. be you're tailwinds SUV year. of

First, see probably in into you'll and remaining year. obviously and into And QX light-duty then that see heavy-duty next frame in the SUVs. variants time going -- then you'll the the

So correct. I'd your directionally say

John Murphy

forward. good of? the unusual of any there there get think think like a second mean, quarter improvements? is and reason walk I about we we I you'll base And to off operational was case this of that that wouldn't about Okay. when think going that is those is quarter should those then should this good just to very make it off not [indiscernible] quarter anything mean, benefit a work seems good that we a

Dhivya Suryadevara

pretty into the No, is good the case. a that that took second you for you $XXX in as I'd base the we downtime rest savings can't say Cost extrapolate the of to know the not its Obviously, we achieved -- that heavy-duty year. million. you've got adjust quarter

of rest the rate the on continue run So expect kind that's pretty to can a on you of a that for -- also year.

seen the the we which launch, coming because probably we're starting probably of be that. of to from than tailwind second see a of tailwinds half just will more have as crossovers well in some XTX see. year will And We

is baseline. otherwise say a I'd good So QX

John Murphy

Okay, helpful.

We Financial, back a question. could about this to Second at sort obviously But following well. kind question up mean the start you up think GM performing capital when keep of point parent taking it it's I maturation on do when where see we very of some company?

Dhivya Suryadevara

with range still earning assets. dividends you I'd we're their took close GMF and the in is GMF. equity entire about of earning and last ratio will dividend XX% to would the may $XXX assets million couple to up Yes. going think continues for the year to we running to time. assets to $XXX see something growing going somewhere They're take hold. say were that to is which of a -- billion to penetrations GMF, going years And recall $XXX for like from billion increase the of the range to for leveling When from parent. XX% And we to leverage period we're as back to grind see billion continue. off, about earning we building of we're the come earning at capital assets. the eventually, we It's over the see take you're that And net a about thinking we income down steady-state in $XXX

John Murphy

just lot relationship any we've noise pricing more system? of you stress there curious into there sort Then supply them I'm work pressure the just building of base. opportunity to is at lastly, the suppliers, slight is some in more with get it. about base? a the of Got more out incremental as your Or on pricing look coming supply and suppliers, collaboratively any conversely heard with

Mary Barra

of work it's with can to over that we've price suppliers it and focusing So we focus We're the on we going strong that look cost build costs, And General to and do doing those build together both our relationship take benefits last out to that. for supplier. how and years and and innovation. on looking opportunities then and together the a really when to continue worked couple on Motors

don't I any I major coming. we don't So don't -- change -- see

see you'll closely together. think I more even us working

John Murphy

just headcount Mary, the you've the you if employment position could if about understand of I X,XXX curious sounds so got and base, U.S.? sort I I more the the UAW, more sneak could of It the X,XXX I'm one think of in relocated. in your when like apologize broadly the outside in UAW U.S. for growth the the your of just hiring can talk folks picture maybe employment you in.

Mary Barra

salaried workforce? from from a about you Are workforce a represented or talking

John Murphy

you're two-thirds a the like of I workforce, -- almost or sounds it should I'm workers. say just -- you've total reworking way these of from curious… done relocating More about because

Mary Barra

So on this...

John Murphy

growth. about thinking Particularly

Mary Barra

comment. didn't I your I'm sorry. hear last

John Murphy

mean, thinking Particularly well, Cruise because sorry. growth areas. as have headcount I you real I'm about right. in the certain in growth

Mary Barra

I at you in it have think So to three look buckets.

every continue those jobs employee we across the we'll United and the As transformation. look for do And predict have said, be what I needs the the get to hourly is this we by single natural And placements through that impacted we for have that States then time was at in the we hiring we'll by retirement. United States.

So that's from a represented perspective.

salary carefully sure workforce, had we only in transformation the salaried overall activities, also On general, but our very skill the reducing planned resources with not the there headcount, we right making set. in

the hiring of and very went now QX we year. then attrition, we've hard to it worked lower at well. this cost And maintaining QX That but And so very we have the we is to And replace Cruise, by to level get that level now hiring as year-end. there. that X,XXX of to X,XXX going get hire employees relates about that to specifically and well there are hard are and working

John Murphy

Thank very you Great. much.

Operator

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

Joseph Spak

Thanks good morning.

have a pickup wanted know lot -- dynamics, to truck get as back of noise laid But into out a go. you I product Just you there. to market there's more just the out lot still

some I giving know XXXX capacity. You've added not guidance. you're

of you this quick like would expect there that any up a internally the Like to on some be is if year? GM than high level is refresh what maybe reason believe a the downtime? product volume that materially But holds the at there at reinvigorate pickups different or that something market anything a should

Dhivya Suryadevara

or not any No. downtime anticipating related to a anything Joe. We're changeover specific

capacity obviously a been full the like say I'd to downtime So excluding you can and ramp-up-type extrapolate the We've mode. get a And past rate cycle line you added. run probably in plus normal we've as you'll rates downtime.

would So penetration again you're we think continues similar with in truck right be market that and the percentage of the -- expect its to volume. directionally think macro healthy the industry environment for I a we and

Joseph Spak

it's better you there's $XXX guess of It I'm year-over-year. China, still sort know a I GMI was secondly Okay. it and within mentioned probably was And FX then that And I looks on headwind this challenged like encouragement that. still assuming and million some underneath.

how you think the do opportunity really about So we how do forward? as go and South Brazil -- we Korea in

Mary Barra

still we So through We in to see Korea we to just of at how in from we business on we're and that restructuring evaluating markets you now unit GMI GMI look cycle have foundation perspective, a of what successful the a few accomplished markets. that set if in create to a build kind out the we've do continue perform. few a

And America the FX being is very we definitely there. have franchise South It strong situation. a by then in and impacted macro

We continue take demonstrated to has work a out. team stakeholders with to all that. that of cost And our though ability to great do

region there's define to we can into we And for that just account plan take our volatility. think going to be continued a

in that markets. first will just note of of regions flow is are the global then the vehicles of other also South process rolling not to out though only these in some be but doing we to China, many think and important America of I in family these

if market as South I to So outperform, America take these and or advantage a going think in keep portfolio vehicles even market. to very recovers have continue we the we're to strong to in

on of great all focus these So markets. there's

We are until seeing can. year-over-year this continue as contributing as we improvement to we and we'll and covering get region best be

Joseph Spak

by be than the stakeholders the Just or outgoing? driven in should indicated profitable South more which classify you the reduction America the with potential in more working fixed as platforms the improvement the of cost a past GEM the you've launch follow-up. Would from

Mary Barra

it's both. I think

All we us of them helping in significant America. need where achieve are to South go in

Joseph Spak

Thank Okay. you.

Operator

Citi. Itay of from the is Michaeli question next Our with line

Itay Michaeli

you, morning Thank congrats. good and Great.

Just pickup back going to the discussion.

it coming trims. particular trims is trims are mid-trims, we just curious, later been your expectations thus market. Silverado Because far signs I the the those LT that off LTs? the in But rising inventory in like the the versus how seeing how year. after curious you're the performing Just there on has a kind while, know in performing some middle are of of the

Dhivya Suryadevara

crew the started And you focusing I'd building the cabs. say in quarter now been the we know year. mid-levels as second inventory Yes. the out of in Itay, on the launch really we've

the to well. to we also out -- will all be we're there mix well. it's to rolling as these balancing are obviously -- of inventory extrapolate propulsion note, the year needs in as And be it's rest hard the picture the of that And important of during point normalizing and what because still there data on out happens launch our one

have at inventory year plan looking as as target you these And the the the variants I to rolling end we we of be. other we're exactly we our once where to our to levels picture see said will a -- starting out want And get inventory normalize. to

Itay Michaeli

Got it.

I switching I view And any events you longer-term back you be and as have, year-end well in of China? that's just inventory might China year's can but I share helpful. this that how missed as very think, to influencing profitability then this, if targets apologize your

Mary Barra

So when the with to the volatility. inventory, levels, with we that be opportunities prepared for be working we disciplined are look at inventory the also but

with level watching So team. closely most and giving at very it our we're direction partner, the senior discussions to the

going the to we we're forward. it right as not to go target. level share to I'm a specific manage going So get to

strong longer very a franchise a When at we term, China. over you look in it have

opportunities well have think and term, for Cadillac, We Wuling over global think Chevrolet it's two significant very are domestic with And strong franchise. brands long with as three growth. Buick we a there and We the strong the as brands Baojun.

of important to we to an markets such the believe, is in EV I like also, get And EV. America be large the market as positioned, from our strategy, a China other launch opportunity scale allows us seizing perspective that of better North electrification part a in very

see still longer the term, brands. with opportunity, a So our global very especially we strong over

Itay Michaeli

last a That's helpful. I one, just the Mary. quick question, had

cited Cruise on in with of Just earlier the you to you number feedback how Cruise given plans might go Cruise the out any system? Or Super next-generation Ultra system? you the change Or Super might roll quickly the on market system, how vehicles?

Mary Barra

this it. customers would Super or I won't that In be technology the question. buy we're saying, technology just And to car rarely feature see you from next car a So, prefer the my in such appreciate without a I do my would has on I strong a about excited really Cruise. strongly support career,

So endorsement works and value that customer. the benefit it to a think provides technology good is and I of way the the the really

in as process on the out segments we but look we'll and we'll it the So roll out quality can, more that. as safety right brands as sure and Cadillacs in making all we and rolling then across of opportunities And we're it we focused as we do quickly that are that of across for do portfolio. the it our

us saw road We're you to this a improve about the to Ultra and continue it you as that technology map you it we use with then, number And it. places add we're can mentioned to excited Cruise, have. the going And with very of is capability. continue

having on So we'll can, quickly we as with safety. be as rolling again a it strong out focus

Itay Michaeli

That’s very helpful. Thanks so much.

Operator

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

Brian Johnson

performance little $XXX imply timing? that you reverse. Want about those Yes. earnings the million slide. would of that GMNA Timing a Can of the break to Good to kind walk of talk some morning. seem bit on supplement

So $X.X look was would then performance think we that the it performance/timing billion-or-so that? or line headwind? as a of then, the for cost restructuring maybe in material how maybe take commodities we would about kind headwind, kind of peak And do and saves less in be And how this what of model?

Dhivya Suryadevara

Yes, sure.

billion of there's in you as to company. -- close you walk, The for walk with In million the I'll the $X billion. $X.X America company timing North because company starting the you're do $XXX and had Brian, $X.X billion we $X bucket, to total total can the company. positive, see billion if total pertain the versus cost So, performance total

I of the transformation is our Out from and savings timing about cost There's and $XXX from of that that initiative. -- $XXX million-ish the material another technical in the million savings cost coming million. of $XXX regular referenced so are million that $XXX commercial

of think timing as about So million. $XXX

of bucket headwinds standpoint, will material from in item and the within a up. But into materials year, will Obviously, where go that's line we bucket, by performance pension the depreciation show be will geography second you you as as cost the cost talked cost of offset it. half amortization the is the the the well. that it and And see have about. it bucket this the the And is be

Brian Johnson

how the trim the second thinking And America as the we second Okay. mix/price we rolled out, be walks the lower light-duty levels about and go half should North second question, into of in getting half? truck

Dhivya Suryadevara

volume overall I'd up. slightly half factors the because of light-duties and being first on mentioned will half as say second heavy-duty versus up being Yeah. be that I up, SUV well up

the the will repeat out. is will mix other that there's heavy-duty negative So element point the that. your of up. be offsetting And will that to a saw be volume year an -- will of it rolling mix in not But some of actually first mix factor offset be will half the you therefore positive

well as going it and down not half see to in you're aspect the SUV you the obviously, that. And first saw

together where is from vol the So of will the improvement going be. versus mixed bulk be HX HX to

Brian Johnson

question, much whether build indicated the in you years size? are and said start-ups as a of fleet the context of announcement, Okay. put And you final out. press testing positive huge robotaxis, -- of kind can into still of that it's Cruise increasing But terms of just number which Waymo tech some the the

kind us gating maybe but thinking update is you're about that how factor, we safety yes, a So – timing? know just of on

Mary Barra

that's likely from something done anytime working both think -- need the little you're we move a of development. is I never Well, technology a what a technology, accomplish we been before in sight to But to brand-new line have on around do bit. we timeline

and And hard We as -- have that achieve. environment working right well. we're to robust have regulatory we a make have the also sure milestones believe to we there we very

would that to that improving we this to out more of public large-scale important And a half work us significant going validation on I miles while in achieve working put second time doing the year, very there. have going deployment. to I we're we'll just have sight. of specific deeper the be to So a get say to allow are receptivity I'm think not line

make So I regarding comments Cruise. be would that the

is technology, very environment the the hard. is only team pleased progress the I very this the with appropriate. but and And So customer I'm on think focus very the making pushing continues to not make their

Brian Johnson

Thanks. Okay.

Operator

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

Colin Langan

gained regain lost for the your good mean, is have holding fully retail just You've a pickup? Congrats share do outlook lost go predicated mean, for to back taking quarter. in the you question. where know you on we a the of lot of, What on in I Thanks is year-to-date. the being up overall second segment my it Or share, you Okay. sort but I from expect you've second? Can of share and is the plants now and half? just running? benefit share to I guidance highlighted

Dhivya Suryadevara

expect obviously we were we're our because will the more profitable under-representation ATP share We of it's segments. say the do into hold to in segments had see have $XX,XXX and in $XX,XXX as if Colin. that a go lower I'd if underrepresented growth in you look the increased share that, been the with And end And like plus-type TX. that product. is what we the really to $XX,XXX doing segment at KX in you we these fixing segments that we

be in. obviously, expect positive as that normalization coming heavy-duty ATP in you So other diesels segments. the will the well out and as lower And rolls

as So half variants in to share increase the second cab year HD. all expect of the well other between the as we do

Colin Langan

business And is not is mean, commercial of quite chase? have still that profitable. recapture plans on you mean, worth lucrative. I in it on the how the do try about just retail always some I side? Or I pickup, know share? to more obviously pickups to But I is Because imagine the

Dhivya Suryadevara

continues with continue that all do as that's will underrepresented forth that fleet on as that grow so to half. with and segment Yeah. in profitable absolutely has will and year. changeover as point that And much No, first but launch correct been And the the believe the had we've you we in will we out we market as retail, be issues, And capacity as in so in profitable. the that well. we in the and not pickup again to second trucks of half something well. is And something grow

Colin Langan

price And original that's through is this tailwind China? that commodity quarter steel really you in $X fallen dramatically the pretty in result offset Is billion weakness factors color the another rest Does FX QX. had guidance one and -- your comment key in the a within helping the lastly, commodity. to Obviously, that the I any of year? think mentioned actually of about of in that

Dhivya Suryadevara

correct. that's Yeah,

commodities. talk did you year-over-year. and year, tariffs -- We commodities January context, not we Colin, FX $X may in said remember, this So of about in headwind we billion that

and how sit headwind a aluminum that and probably moderation here is that's we we think to originally There's how -- still your As commodities have guidance steel the specifically. of that's of what But we're the we comes to we seen to the international closer in of elevated. today point, expected prices half couple volatility a serving your about. some and offset to seeing that are that balance on point that's

Colin Langan

right. All Got much. you very Thank it.

Dhivya Suryadevara

you. Thank

Operator

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

David Tamberrino

pricing in well thought Yeah. favorable have a if was North headwind out are into typically think in I quarter, there any there know because and than Great. Maybe whereas that just that's the I million would call in specifically didn't carryover very both, think folks products we your can get specific most I more both as you was America $XXX historically as could year-over-year. GMI, in positive

dynamic So I wanted carryover. that to on understand

Dhivya Suryadevara

In a David. the you Argentina. question is that Good side international lot that Brazil of in FX in see pricing Yeah. and catch-up

Argentina try As headwinds line inflation you out FX there. in with know, we and our Brazil to all in price the of

be the in car say know, discipline factor. XXXX, down price to carryover, the positivity our ramped lot a there carryover and we maintain by Cadillac have that's So headwind fees. from significantly primary able we're car of States, I'd a in you to driven well. really is as see, there we as of United our do international segment. continuing That's And well. a perspective inventory used our a pricing lowering it was portfolio. as It overall the In to you have as

out. as big two So factors residual Cadillac that the the the seeing I'd we crossovers Those improvements have through value in point to flowing are on that road we're well. are the currently

David Tamberrino

the though XXXX had continue at passenger GMI a But the the that XQ for quarter. even on should something mean strong mean like it got Okay. very you've of sounds side, wind-down half. back is I of you pricing cars? could looking that that America, North into I continue

So just trying to there. understand the dynamics

Dhivya Suryadevara

Yeah. discipline as time. winds pretty car between as well. see compact strong small crossover bifurcation mid-size inventory down should crossover. Crossover continue I'd there the say, and we'd a the to be obviously the probably over versus There's

mid-size a from will we the smaller side. and but on the positive So, compact continued see pressures

your it's to probably balance harder year. last on point a say I'd So, comp versus

segment headwind to So hold carryover car up. a maybe but specific crossover a a little the perspective, continue from bit and should more of

David Tamberrino

behind then kind to And and had into for pushout used still running improve that. perspective; and questions the want folks of technician should a Or I to bit this large-scale and It's to safety of it XXXX in deployment? drive it one, receptivity I then you little getting Cruise. on into dive couple a that I you the little more but like -- What by done And won't a commercial in secondly, the deployment? technical bit earlier Mary, a from a Okay. so the in be delayed public investing regulation. are Waymo's with technology? Is regulatory from plan something call far, timing helped else? Phoenix impediments what's what it a the a gated something vehicle

Mary Barra

we safety when can about Well, will the be talk vehicle when have we safely a vehicle. operate deployment deploying trainer think, I the without our in

So kind point it to a we're the that's trust looking just lot think of one. build, communication. is -- of, that I for

San marketing very to focused. have And very city so in will so, to which plan thought that we out Francisco, targeted the deploy first a well that is we be plan

the and road drive, safety really of of improve also to discipline today the is able -- the that and For vehicles can vehicle, environment be see the articulate to and on better laws anything. road because that AV create this understand on safety what the to under we're doesn't who road the influence to the doesn't people in doing follows them safe all we drive

the understands perspective, getting And be safer engineers ensure what's this. receptive have to truly and on us just to has driver those. and I a that can of do Cruise you some vehicle that have so than would see working what's going going to to to need human campaign understand again, the continue coming. clearly, technical But best technology operate as have city, are have happening milestones just they how to you keep also will is what happened everybody meet new think, and AV a they're think then you our for engage that marketing so you're you developing making And the say I from to a is hiring the the enablers be to complex to well as I we And this on is safely. more

working do be achieve And be parallel iteration gain So validation we're the that our to testing to of journey. in milestones, continuing very strong. regulatory approval. and The the rate while to on we'll continues on

it's needs done. And still I be impediments work that there's to there, just wouldn't say

NHTSA understands this importance a the think I from safety technology of perspective.

three approval And think the we're then on the a in of consumer so parallel. Those to going be all paths to going there's that important. are that be together to sight able trust is continue I work get And or the building and regulatory with line three aggressively. we're to to

David Tamberrino

in change supplier side. the relying a technology as follow-up on this underneath your technical upon a just you everything Is step point are And Understood. control? Or [indiscernible]? noted at any from

Mary Barra

control. under is Everything our

David Tamberrino

Mary. you, Dhivya. Thank Thank Okay. you,

Dhivya Suryadevara

David. you, Thank

Operator

of – Dan Our sorry, the next line Suisse. Credit I with Dave am Levy is from question

Dan Levy

to I of question. and And Hi. quick start for you strategic questions Good a taking thank then questions. financial couple a want just with the morning.

on Just in back like in you I talked year I side to was in steel here know now back the And being where it raw some commodity go billion I If at something first North mat it last XXXX. to are had mitigated. those we you call America pressures believe headwinds. of with $X.X

prices timing metals whether et why the its headwind wouldn't your $X.X know, steel reverse that is that of differently. XXXX Now where precious other But in from I I contracts. has most headwinds billion that cetera. And there's changed given raw there around time? there's stuff or know aluminum that stuff mat over headwind

Dhivya Suryadevara

Yeah.

referenced over you earlier a January. think a time level about a remains value, aluminum is lot a I'd the pretty see headwind. saw significant flow smaller it's that a versus commodities particularly through. of few significantly significant Dan. palladium, well. in elevated we see purchase which to other and commodities we're I will talking And you're are that quite the we see things at tailwinds I There's to as what in tailwinds against, steel starting even that starting say And relatively

now half prudent around $X And And we number. a $XXX get it million. of and down had as to there's we're billion a closer to felt well. obviously, therefore, uncertainty to earlier still We a to it's – tariffs it type getting to

since a it We get watching see will that we have through little and lag the as indexed we experience also get through. And later. effect we away. keep these the improvements flowing come don't that, right They indexed

So you'll if the come to market hold through the see improvement continues up.

Dan Levy

now, timing? what's On say sort take like Let's how of is XX that those to flat it it stays offset sort Is typical like steel the fully of right lagged months? long it headwinds? would effect where

Dhivya Suryadevara

timing and – is the place. portion have There's rest for we for it the contracts negotiated – all And a indexed it. have the of over of we over contracts that's

come our basis, having indexed nuanced roll type months a of you of so From negotiated. from negotiated a bit in through. would three that on lag perspective some this a an and might out a-third, perspective yearly contracts see So a-third, a-third more be about a

the can metric across So, not apply that one board. you

Dan Levy

Thank apologize what far negotiations a something amount I you some have signaled good has go, in the the quarter? in amount know it. signaled of you. Ford as Got kind it UAW fourth missed but Because earlier, as assume And I then noted. sort I of just to bonus you placeholder if that

Mary Barra

are allows our looking do. which that to forward productive to mean, we us having customers affect talk discussions. stronger employees a to company, and haven't. and There No, a will need are we approaching we I topics which future that we'll challenges for our and discuss sure negotiations we business making benefit constructively our address that numerous for build And our that in shareholders. employees, we're about do the business our really to way for can looking

aspect that's approach to have specific negotiations. And any that. financial So, we our to UAW signaled not

Dan Levy

just around you've and strategic to in obviously a approach. Got some a EV thread it. taken question. the look And you've trying amongst the slightly collaboration ask want automakers then When different landscape to you investments seen

So, approach. go-it-alone far it's a been more bit

being and much. my have question But considerations platform that best profitability? you you're obviously I Would have ever what other Europe. consider into in guess you mean is your -- forced NEV? that doing automakers scale? sort So, don't of with with would I doing not deal the to help same with -- that this to with as you And don't use allowing is VW would this help

Mary Barra

arrangement is we Dan are doing would with have Honda. what Well, we I say is an

electric the some have partnered us vehicle with of already cell we and components. the So, Honda -- has already on technology

of it one actually and And other if I were we -- with open we -- it working to first that. move do from think has already if Honda. we I But the an we're first to forward scale So, perspective it the well. And OEs make further. are as think engineering benefits that definitely provides doing savings leveraging with even and as not

Dan Levy

assume as a crucial to part And EVs? I reaching on scale breakeven

Mary Barra

of the especially cell sure. at look level to for one you you get to many. scale scale battery say as I'd does and drive But -- right a is certain as manufacturer Scale the

Dan Levy

you Thank it. Got very much.

Mary Barra

Sure.

Operator

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

Emmanuel Rosner

Good morning everybody.

Mary Barra

Good morning.

Dhivya Suryadevara

morning. Good

Emmanuel Rosner

It's line is to of half. pretty GMNA range volatile. you that guidance. But moving have around dynamics a lot seem the wide question of fairly also quite the decent this in reiterated And the despite some industry first second on it's So, of obviously sight pieces.

of end cash end Can low earnings just relates remind the free high even factors are you it so variance as maybe us as flow? relates between to and what sort it like the the more and to

Mary Barra

there's I to tailwinds, the our headwinds. guidance year. I we think able Motors to I both General fact we meet some commitment. of that and the call try would I at do the think what the confident Dhivya the is that highlighted definitely remained we've stated beginning going also And we're at through very be to some there's say

have conditions look we're -- our look when confident at And you our at look environment at you are you we year truck our in full-size look how so you with the really it's markets, and and crossovers and positives But guidance. the moving at days also then in have strength we in full just forward trade a of in Cadillac. the there dynamic the and some we're macro very growth the of early that franchise China launch GMI that

there's saying half sight. And we're the that tailwinds, we'll be is definitely in this we a and line So, the our there's what we of see able are volatility And variability and work of guidance. definitely maintain definitely to deliver headwinds. to the we committed through have second year or

Emmanuel Rosner

deliver to as incremental the us program. year. your $X to $X.X I year of $X.X a track Okay, whole benefit maybe turning Can that's we on billion this to number to billion specific a that? guess a It's to next $X that additional savings get obviously other into you that for There's get on nice come actions to point as to chunk expected next helpful. billion these Then you're restructuring would see year. way billion

Mary Barra

is when this of we'll just timing And achieve how we're to cost fact XXXX plans. the track we we mean the just It's We're we that in plans. that. the said, announced are Well, them when systematically XXXX. these and out, on in have it we're I much it be balance I executing think out of when detailed comes we but very -- some laid

But the every single first a a this rightsizing we engineering, a was was element SG&A. of did it QX and between accomplished One QX manufacturing, between very between and in of that third, headcount year. third salaried the third,

on to -- been able guess So, as that you at give that that should I I what all well. confidence and track. to deliver far you look And we've we're so are do that track XXXX those on think for

Emmanuel Rosner

to you be well? in the outlook attractive just extent then what's helpful to us a And specific be of big the driver your of as outlook will maybe segment. seems profitable XXXX Can out especially the for examples Okay. coming it just remind product finally and launches that China

Mary Barra

that be very we GEM important. coming Well products out are that are to definitely our have going

have The some vehicles crossover Cadillac. We significant. to also we XTX very is think going be

also be segment that CTX there. and will Baojun the in an important launched We products also so then have -- some crossover-type

a luxury of it out what brands is are I having nature why customer So very because position launches if important you model we will an there also seen us SUVs QX preferences crossover all crossovers vehicles in in I at QX Because think are the so these the look well. SUV many as coming that our across and seeing and shift will all-new significant we mentioned of are more -- be marketplace. we because to competitive have

Emmanuel Rosner

you. Thank Great.

Operator

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

Chris McNally

can maybe second look the asked. half, revisit some to bit terms like that's launch of call a a try next whether we could thinking angle. Just bring little mats year? probably down probably just even would sort cost already helpful. call then to relatively questions Any just pressures? we is the different very QX inflationary next flow out? Thanks year? or walk they the any significant it mix. qualitatively guys. the for incentives again of you content everyone's the things of just talked the think headwinds that year any did obviously going the be XXXX does raw from be think UAW rightsized. You going When cuts, D&A at but at have to walk a of through out? some of view clean I'm But headwind I you And you cost in about But and costs are that's production don't When downtime have you next a that more So of

Dhivya Suryadevara

of predict Obviously, XXXX. here the Yes. is as to sitting in it's Mary going hard the what look environment like middle in mentioned, XXXX to

tailwinds a the we be secularly that are income are to a really higher pension. have think D&A and level you've for well. always lower said to the for I and items going pension captured normalizing -- two product-related something level D&A

one actually attributed. So, that's item that we have

to that, is speculation to it's other financial how steady-state than remember the levels. any you of conversion, going our would if be cash their to to But on of factors fact the other If will items. normalize one were continue items more that it these I get be thinking

the as into I savings to mentioned think we'll an look well going continue cost we that enabler is as be executing. And Mary XXXX.

Chris McNally

in probably it's it's essentially still not technology. at Is if And of autonomous. thinking great. customers not the not secular North the of to the of And not just it of -- Detroit just then little standard that that what's I'm paying Toyota a but maybe sort becomes have rollout about a are Super to a a But Europe, basically there But of some a mandated. Japanese just product That's I not similar pretty It's particularly we Three more ends think Could about it been some bit the it's rolled look maybe available, ADAS talk you out? that chance you've of Cruise? when and hop rollout way as low question. for sexy can offering standard. versus being AV/EV. as the attractive America we not on sort slow the of It's

Mary Barra

makes segment-by-segment entire a the we they that to then look to if sense we to And ADAS want can't on safety the achieve also opportunity that. customer much we're at because to what have that So -- committed you get it a technology the question across vehicle so afford portfolio. it's see have don't

walk around and to segment-by-segment. when We vehicle. safety the customer-focused pretty be you clearly the comprehensive very So technology we're trying technology technology, have

it's think are as really in a -- and package what some make receptive to being done work a choice. have customer to I the good it's last available sure We first giving -- standard, if package to not really opposed

you really in the So work technology, some to -- the that develop have do to gain it and across we're Super to it then standard. the going think portfolio will Cruise, to of Super important to we're I available going that Cruise functionality And continue but be continue cases growing nature the committed of feature and necessarily know very think not game-changing and is said I I we're also it.

Chris McNally

Okay. Much appreciated. Thank you.

Operator

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

Mary Barra

guidance. lie strength It's year then truck launch this and Well, ahead in minutes based second models ago, our we year, that in the few And with at the in we confident call just participated as year yet half opportunities of morning. well. I in as as on the that heavy-duty crossovers full the of I we're the our continue remain appreciate said this where everybody a the and especially

as savings business plans. chunk well-defined track with on associated cost also transformation. it already a deliver to I We're then behind of us have mentioned -- continue with execute And to the good the we

of as industry disciplined we back recognize at on AV look we the at But And EV reward these more as and privilege step lead the there the working that of and as get future and that it, challenges. accessibility giving are choice. we being very customers for we being transportation is we overcoming of and challenges the to able look more

stronger our team. that's and win benefit create GM the that sure shareholders. So dedication a do race committed our entire And we and working that customers, future we for our the will make employees, of the are General and Motors to fully

So thank have We hope you a day. for participating. much all good very you

Operator

concludes and the Thank conference for call joining. that you for Ladies gentlemen, today.

General Motors (GM) 1 Aug 192019 Q2 Earnings call transcript