GM - Earnings call transcript Q3 2019 | General Motors Company

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Operator

Ladies and gentlemen, welcome to the General Motors Company Third 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 conference call is being recorded Tuesday October 29, 2019.

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

Rocky Gupta

Dorothy. Thanks and results joining of for everyone review as XXXX. you financial GM's the thank morning us, for we Good third 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 other today GM's Executives. Mary Dhivya by and CFO, joined GM's Chairman President, I’m CEO; a and Barra, Suryadevara, Vice number of

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

call I will now to turn the over Barra. Mary

Mary Barra

Rocky, thank you Thanks, joining everybody, good and morning the and call.

winning ratified glad From components. trucks, outside, you employees we skilled for crossovers our back highly the As company reach to our realities goal shareholders, works and and transforming building of I we are that labor our that have an as industry. cars, our our our the rapidly am agreement very a and employees know, was work agreement confirmed to

contract for our team. health flexibility. productivity, right and and progression safety, create motivated without engagements this temporary shareholder forward foundational half is of workers all employees thing satisfaction, will our and company for creates more our the includes future improve which or that of It a competitiveness improving will and compromising job the This for A does and in quality strengthen value.

U.S. planned established pickup affirms manufacturing electric plant The totaling leadership. with builds an assembly to of billion. strong that on base the with contract also truck future We'll Detroit-Hamtramck our our a commitment $X.X investments truck secure all-new

on manufacturing Valley Ohio, production jobs. forward which an will to effort We’re cell Mahoney X,XXX bring in to create the also battery moving

in and in once ratified. our prompt, as I dedicated our restart ability the ensuring safe our a marketplace the who minimize thank and want to by constant they part. the stoppage very work to service I'd hard were was to shift helped And inconvenience new Before and I with be would our the limited for us to us continue, worked to ready throughout contact dealers caused also They they momentum sustain suppliers. repair like customers our thank contract

cars To to place flowing quickly the as in dealership, and plans are get recover comprehensive network recovery speed to allow as up to possible.

we now, one forward are moving So as team.

work profits However, stoppage loss from we this lot full were minutes, in the have of impact In our few the about a a do areas, of the many drive work as will and outlook. significant. talk financial year Dhivya to

quarter, adjusted billion, we $X revenue adjusted EBITDA X.X%, $X.XX, flow billion, $XX.X cash automotive of a diluted EBIT, adjusted four of on $XX.X Overall net quarters adjusted in delivered basis. of billion, trailing and of third a free ROIC $X.X adjusted EBIT the margin of of EPS

demand led for which strong we and unfavorably new and full pickup double-digit increased Silverado and the in America, related impacted and strong business Sierra pickups at delivered retail light-duty full Looking Overall, the States and size in deliveries GMC by strike North Chevrolet pickup was to our by warranty quarter previous year-over-year trucks. trucks performance X% rose size generation gains and retail our the cost SUV. all heavy-duty United

XTX quarter the in its China. capitalize is the crossover United led and which expanding the XTX gaining the XX% portfolio US, in by States crossover in the and on increased momentum by to continues the In deliveries leading all-new Cadillac Cadillac market. segment

lower the drive new and China, sales. XX%, up helped industry the deliveries XTX In XTX amidst

Cadillac strengthen the we joining lineup, China's its position expect XTX With will luxury SUV the growing in further segment.

luxury quarter built all sedan the next portfolio CTX CTX North new in China CTX luxury with this updates U.S. in launch and year the America. the Our continue early sedan by midsize of by

third quarter healthy the at meeting look level we inventory. of as Finally, with demand, dealerships a finished customer U.S. our

the many as our vehicles As teams possible dealers. as continued, to our to ship tirelessly could work we ensure strike

pipeline vehicles for our everything additional vehicles normal restore The our to in inventories that's dealer no like. with is many powered However supply leaner will weeks, to team of doing the than levels. back be we'd temporary

China, Regarding shifts our sales industry because volatile. in growth business delivery. international environment for nearly offset by models, relative vehicle operations, demand in to remains of lower in quarter. declined the We underperformed industry Year-over-year, and challenging XX% partially the outgoing mostly segment Cadillac the and

are in We to we the models plans mix. launched addition new and taking improving refresh five quarter. our seven models fourth quarter with appropriate to In cost in actions, third launch product new

team reduction environment. the improve performance, continues cost given In on to initiatives business to accelerating focus addition, the

carries we navigating South rating. FX America, is safety a our new Chevrolet while launched take In challenges. to the franchise plus improve the South continue protect and in in America steps all strong XXXX to star vehicles It we and model of and the In macro global Onix five our September, family Brazil. new first other business from

on month customer back demand bestselling next Chevy initial this its believe our brand and the leadership and further are Onix supply outpaced position month we During together, new our vehicle. and strengthen these as greatly available Onix The hedge will we production region's doubling follows sale, month. vehicles

every quarters. continue this in decisive not. sustainable operations coming cease execute achieve to we we our our plan the profitability cease Earlier Indonesia Chevrolet intent and international As announced steps turnaround take we for market over vehicles participate in to are selling we week, that operations, to

is at price. our XXXX Chevrolet Bolt enable is the The weight at delivers EV and to miles customers. XX more models, launching Turning density all XXX that the EPA estimated battery with same that's more value same year's energy our full range an progress, greater improvements the additional electric miles but of as previous its battery to range of EV size and pack powerful a charge

love what a battery times leadership improving to just The this expect also excellent reducing hour, customers per and powers torque, continue. industry our on our we XX range X.X about battery built kilowatt Bolt of instant seconds. progress zero and handling, vehicle, It's and to this and riding XXXX cell retains

engagement on its relationship and Cruise and testing AV And its the the increased building. mile front, during community quarter increased validation and

and addition Honda Cruise, joint built development shared new purpose autonomous of In a vehicle. GM their to continued

recap, also in States. robust supported to X.X achieved and track quarter to cost targets. So significant crossovers transformational United a and XXXX transformation our made in We've strong the is in GM by the of and realize sale were XXXX has progress our operating performances initiatives. trucks on at cost our billion savings

$X.X U.S. will additional cost of in our investments year-end arrange and started Because to manufacturing, revise savings billion planned between billion. $X XXXX we

our target. The all big the savings on strike achieve take also results to will possible have our our a as will did steps of impact necessary We QX to EBIT impact results. significantly adjusted much QX as original and

not free will guidance. of in we constraints. of adjusted cash XXXX are be Most recovered strike-related automotive, Therefore, our revising our XXXX flow capacity in production automotive XXXX because EPS-diluted losses adjusted

outlook $X full range is diluted adjusted is on EPS billion. automotive $X.XX our updating cash now and flow or zero Our to guidance $X.XX, year, adjusted to the free new

have to will find offset, the now asked GM find they and I that every team resumed opportunities. production I'm many has confident

over turn to that, I will So it Dhivya. with

Dhivya Suryadevara

the the the want morning labor good impact to the for year. our the strike, Mary, our I outlook Today, quarter, Thanks, agreement, for performance and and finally of everybody. discuss

adjusted adjusted a $XX.X we billion EBIT automotive diluted $X.X EPS strike quarter, in adjusted third free an basis. in cash $X generated revenues, the $X.XX EBIT the in and billion billion third flow. the impact net adjusted $X.X quarter margin The on in billion was In of X.X% gross

cab, partially heavy-duty our impact reflects crew approximately content, items. we was as $XXX of as related well last a of of by This impact offset launched richer lost high million high aftermarket This strike production favorable margin product and as the mix timing sales.

quarter been turning Net strike, lower by free $X.XX, the adjusted of and EPS by cash $X.XX flow from an these PSA have diluted $XXX for due the record. EPS was approximately strike. the automotive during and also impact of items, The adjusted includes loss all-time the approximately million EPS quarterly Lyft revaluation. $X.XX lowered $X.XX would a Adjusting the to the was

billion, and cost closer and This partially $XXX this of warranty let's look heavy-duty impact and benefits and costs Now XX.X% truck up our lower North delivered performance offset the performance, our driven the year-over-year, of actions. adjusted million margin EBIT pension crossover was strike, take health. America a the by by North America. from our $X at

Market heavy-duty Our have newly to for up improve, trucks since our quarter. percentage launched to pickup in X market deliveries gained share continues and contributed We QX launch. share we our large QX favorably trucks points the points year-over-year. of price in and heavy duties volume, the started percentage in during mix X

rolled variants. at as trucks pickup duty year-over-year diesel XX% light over Our improved out retail to in we and other cab QX X.X%

with as by of the and strategy next, have will for launch We cabs gate the duty for we regular heavy-duty did the light double followed the cab. same rollout

year-over-year providing with Cadillac U.S. results. a XX% Blazer strong crossovers, to Switching and Chevrolet deliveries our contributions grew to XTX

International. GM to move Let’s

third GMI For in quarter, the China. equity EBITDA million $XXX by year-over-year driven was income lower in adjusted down

pricing Continued due recently industry partially million weakness vehicle. QX, improved to equity down launch income from from level. We QX slight did in see resulted XXXX year-over-year pressure $XXX record mix and benefits our

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

and quarter quarter unfavorable to a investment from of third Core year. Lyft year-over-year this segment year PSA the -- costs last in our sorry of the gain in PSA $XXX year of primarily from $XXX third in quarter $XXX million, net compared million were investments to loss million the $XXX third due million third

initiative achieved on made billion our have cost savings We progress $X.X transformational significant since XXXX. with

billion, track on billion quarter. million $XXX third target $X of the $X.X to with year-to-date billion in $X.X achieving XXXX our and We’re

our the you Let me on update calendar outlook year. for

approximately on and of to billion U.S. is QX. recent adjusted The production including automotive last a and unwind. impact EPS in capital had strike to reflects diluted a financial obviously up rate sales, of working negative QX We tax free be in performance ramp approximately impact and and start earnings. the X$X on adjusted mix, net a our $X EPS richer $X.X lost of after-market in higher share is cash per the lost cost, so year impact calendar be impact estimate more flow The

While in portion this can we efforts, the recovered this, constraints. to on our work Factoring small year range in recovery this diluted during strike of we that XXXX outlook we capacity due sustained $X.XX. EPS anticipate of the is to $X.XX continue adjusted losses of all to be strike have updated

range flow this Updating for commitment. strike, CapEx, of the early cash we would to approximately given I CapEx expect the of and some additional guidance. adjusted the flow this Catching achievement perspective zero in $X of underlying of to year guidance on this on consistent $X.X we due the billion January. cash guidance XXXX billion. is automotive The timing range provide and EPS and expect like free to free in with impact

operations unusual have We highly the the our situation shutdown for experienced six weeks. of North with American

very ramp and to our very close difficult predict year factors timing restarting operations are this end are of and speed point. We at production the to

have the We best estimated the we today. have given provided outlook information that

want talk the earnings agreement. without of new and balance power. to Next, manufacturing labor impact The I competitiveness, briefly our sheet agreement our about strength flexibility, preserves new compromising

define and mix to industry obligations levels, to maintained in sheet balance of retirees. to protected footprint, the ability our the changing American no obligation work or our response benefit increase with to maintained payments have manufacturing increase no North force pension We adjust

million We downturn. is inflationary, economics this maintained period It is we therefore to XX while range the million to the ability that incremental XX in important labor expect initiative. offset through and navigate to contract the to unit our U.S. agreement levels a with in productivity breakeven preserved over note

touch XXXX. want I Finally, to on briefly

year of me depreciation the in downtime While higher continued provide takes. outlining puts our number and of and South by and in a volatility February, SUVs, ramp guidance likely industry Headwinds for for we lower the full-size let full will China in America. include help launch volume, and XXXX up frame

our XXXX truck heavy-duty maximum we size three our capacity. and family Trailblazer on and of will including to Encore year performance loss depend run transformational GX, product cost the ships during full savings, the recover production capacity Corvette, include already industry at as availability vehicles. The production, and XXXX in in truck plans Opportunities launches strike our full ability of global

will we a that to as of Lastly, incur in plant, our our scope the decision original plan. invest result of transformation Detroit-Hamtramck were costs operating our outside

We're potential. adjusted opportunity free approximately annually, While cost find financial cost every X trajectory, our revises this year-end $X to savings XX% conversion. to we savings including improving work margin, to $X.X will and to slightly plan core billion are EBIT of committed target long-term the and maximize flow cash billion capital to billion, our our

underlying the the the January, range impact is with the remains strong, summary, guidance In consistent of and in our business strike. given excluding

our a flexibility and contract the have agreement environment our both over over months entire and a economics on and than productivity. We labor we the The execution, offset the team competitiveness is more that challenging preserves period to expect focused but short just ago, is with long-term. few

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

Operator

Instructions] [Operator with from RBC the Markets. Your comes Spak question line Joseph first Capital of

Joseph Spak

flow. I some That you do then $X start color could XXXX want to much billion some be of than capital maybe the know of much maybe bit early this cash year, flow on the factor? the expect said, cash, probably how on fourth with Can I And in into -- unwind lowered on we to quarter, recover on it free how average, to guess on timing dynamics achievement. you that. but the gauge also seems XXXX? on working mentioned, get related I CapEx can free a and the cash year. higher Just little XXXX like timing might you per impact each we then to was part

Dhivya Suryadevara

from XXXX a billion standpoint, does XXXX. commitments achievement to $X say would of commitment achieve impact and our I the in Joe, the not Yes, early CapEx CapEx

even we From achieve XXXX, forward So that. that a commitment can pull in think perspective, we still remains we timing intact. though

To on impact obviously, the profit free from impact, flow question flow into the free there's cash your cash flow. through

items remaining that, amount driving and working sales to addition timing and are seen warranty there. we've allowance In capital and so policy the and on

the get remains lost to capital CapEx intact, working map X.X So, and of X.X. comprises profit the that's the the unwind. and to the

Joseph Spak

sort like might seems the a then just we volume was I to if XX% some environment is out recovery of days 'XX, in running year get an assume the make to looking that the just on next trucks. and back know you're market of all like Okay, to in It as and on it, noted, the you and said dependent you similar XXXX, at you I be XX% back and is reasonable? counting envelope, able assumptions. calendar that But

Dhivya Suryadevara

industry time the also need that figure industry. the your like It's really now, Joe, difficult segment because partially within I is be hard travel to the out think call overtime. And it's what to i.e. to are you point, to trucking add running going to and out. over share we those all

will So, like. would we at that this just now possibly we every to difficult predict what recover look point, unit that It's can.

Operator

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

Rod Lache

I questions. had couple a

number there strike. billion, billion was and have it appears adjusted free The year's the the original like $X.X for it variants savings adjustments year. like looks for billion put was cash to And got flow another closer Hamtramck. this free the of making that cash with would to sounds flow at billion you've $X.X billion $X to First, the next it you're $X wasn't $X if

So, the your earlier evolved what's thinking since in in Hamtramck on year?

Mary Barra

the made we transformation we electric our when announcement a year, in had last So battery plan. truck although

trucks. our we to of to continue that we into company an We appropriate the full maintain and Detroit-Hamtramck agreement battery is that As looked opportunity electric getting and at evolve and there position what leadership great grow can labor at a do there. truck really now range look

good battery as lead so, is internal in combustion trucks. in And electric well trucks this think well positions as investment we a as to

we clear work efficient there. can as we that planted, doing more be portfolio it so And became that that further is that

Rod Lache

were things there's forward GM might, both make America? items releasing look about this bit but be just a they that mean adjustments business? unusual how like the now. very affects cash for launch, cadence warranties those Obviously, North about you that in strong Financial what those, from from existing that Financial quarter. aside we North America did for pre any going to And of Could the should and thinking may and you right GM talk like little just

Dhivya Suryadevara

was crew To as a XX her will does other as well question remarks roll your on favorable a that North repeat And heavy-duty warranty, yes, onetime we year a had $XXX no a unfavorable in a normalize was a was variants of The from lot warranty quarter. in there we're we by Mary mentioned strong mix rolling well. million cab for primarily and the of out standpoint, XXXX. driven American year-over-year that our last KX From which item helped not cost lunch in out, XXXX part. that as most very since cadence the it as the points

from side on say fact process perspective, a item from as capture values Delta in relative a in to that perspective, a rather of was normal perspective I'd and well. coming accounted some that year-over-year things, well, the warranty there that. we ups And So, than for. through residual QX, From impacts GM a is were that previously what the go that but tour biggest point we that that the as top smaller I'd had stronger have been you Financial to

we think to of be there about that So in continued normalization you the forecast. items want growth Those The from are GM go offset perspective. would normalizing forward some kind move may as you the there. closer the to of book Financial towards as size

Joseph Spak

tell for this would you given at to production the some incentive us what’s declining for of And America, yet there inventory. just is I North and point? make clarify units inventory, you about there? Was adjustments XXX,XXX anything asking QX have prospects that And I have that just accruals in over was can expectation unusual presume

Dhivya Suryadevara

driven be nothing we’re obviously time. said, are up specifically the that’s nothing to there to share we the perspective. all and market and out. dynamics side, all incentive report our going now plans and production, on we’ll And from we’re we we’ll up when to all we point and maximize can comment in a specifically at of we have opportunity we’re of units, about number the are whatever this Yes. a to – it excellent that get on any we Like take and vehicle-by-vehicle true or I’d out trying by From QX say still will ramp running back that to QX. can running since more

Operator

comes of with of line Your Bank America. next from John question Murphy the

John Murphy

around First your X,XXX buyout and targeting agreement meaning about it's they're X,XXX attrition on about of the pensions looks basis question been annual labor special natural the workers. on It but it attrition of I’ve and workers are senor, like defined just seems sort half like what getting program. only dig is based up, an to able workers, benefit,

natural why would the XXXX the still impact have of sort the more that curious buyout not just workers? three special overtime? attrition contract, in attrition, And year? years next program? that on then So a larger it would even that program it overtime target why might before be attrition And see kind is So second, natural meaning first would impact of per expect what is to next

Mary Barra

couple a think think about things to here of I it.

special choices. all, was big of component of one give to attrition First people program the

was that impacting other perspective. is we that to we going there from see three un-allocation attrition and wait then natural the course we everybody think we wanted Although, if have for so see attrition that agreement. thing give special and people And the there program, is, of again also you options the by can do but there a and of the target -- over is plans, them to job the look

the continue that’s SAP size we I So, be. that and how what would we to should thought expect

John Murphy

thought out it'd one-for-one entry us trying those over Just special on think size And I or years, the California replaced workers attritions as whether is Or Mary, natural those mean, the how cruise? hired there folks what, of process forward? what be then workers? be we be in for the to or would few to could going next sort workers? work back labor to your plan for level in-progression as far when sort about of understand feeling there of get with

Mary Barra

force, There opportunity our it's going directed and -- I of and the there the as our Well, Cruise many is we to think salary is a think I is work workforce different labor we’re representative productivity to a there components force. workforce. labor is represented force. there. continue have your is on And There question then work

lot We we manufacturing also how opportunity design that and of of have a perspective vehicles. processes. we’re manufacture a driving and design in continue to year this a ability improve from lot for optimization, into complexity our We’ve work done

more We’ve of the find view impacting also been all-new look architectural you vehicle customers some to at being and more without when able especially to opportunities reuse components. is our of

on have end X. built-in X. years for quality many our We the virtually also we've will a program built-in And the all achieved year, quality call been level of plants by working of have

Our months level health as months two better built-in quality by X, and which to performance. measured quality leads better and warranty and safety first XX

manufacturing efficiencies So, optimize are on improvements. sure We the our we see optimize those costs. then, traditional we coming productivity our built-in going vehicles and designed from components workforce the perspective. from level the see see, to make All And X. results and things we quality us we help say how DFMEA I'll

we’ll As path then an permanent we also the and proud fact workers, the flow. that temporary appropriate workforce and additional our temps both we utilize of maintain to for need hire employment I'm to provided very in-progression

and the at that situation both of plan So, on the those plant. we'll depending utilize

John Murphy

with you, next in the Is what's happened Got strike? there the year change just SUV helpful. on for launch the that's SUV on any Then launch. timing given

Mary Barra

minimizing course, of make launches quality curve. said to the three to with team specifically those of successful next possible out acceleration year. do launches We will they haven't everything sure the we occur will all impact working roll have is the versions and And when high

more this specifics those those get done to on year we'll So timing. give we all and I'm still any not going

John Murphy

your came your cross-town negative and in the importantly quarter, more some Okay. from of a press. but your put there's up And of also been on rivals but of then lot one Yet majors, on a million the put lastly, $XXX you up sort pricing, a positive, comments the $XXX positive just real you carryovers. strike do seeing mean, carryovers or by million that actually from some I net some positive positive in landscape for competitive pricing $XXX on sort price see the benefited is was you What during that of million you carryovers? on shortages pricing?

Dhivya Suryadevara

a say From mainly that by the the heavy-duty light perspective, launched. variance we’ve I'd driven our recently majors it's duty, and of

and strong, franchise that's were driving those the that’s really truck So that.

On the carryover side, standpoint, quite we crossover the outgoing model our from disciplined a well. on From car incentives a were bit. as perspective, we that reduced a

disciplined. So positive, the price. net forth. grown mechanisms continuing net share so overall, being duties path be plan that as just for on I on with intention, majors well disciplined. and can talked based to going quarter-to-quarter That's we John, see would a say our have of so on the that quarter, both heavy as and But in light on duties. carryover seasonality And I about, going as stay We to you vary it's it's

John Murphy

And Dhivya, pretty out any I seen sort any are kind there? in I mean, you have a I you there? mean, of deterioration guys of disciplined, are but warning you signs understand seeing competitive environment,

Dhivya Suryadevara

gains this time. we're, you our going there's so the on, definitely it then competitive with and market share products strength out and driving our launching, And cadence. some put we we're think see of we're that where I normalizes months activity the are but

Operator

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

Itay Michaeli

inventory optimize you talk manage have question opportunities to richer being in the we might with and can next to you you So kind several the beyond mix inventory and leaner, of as for now about over months just situation? get try QX pricing? Should mix to expect first

Dhivya Suryadevara

that Itay everything going mix a and We're to from build perspective. get can try we

will make from that down standpoint. mix it as continue LD we most forward. and profitable the maximize as out richer our and will, sense try We path go we rolling of will low, the an HD

to we're opportunistic we along. going go So be as

are And and we, the are to places that there that there's we profitable towards well. mix are obviously, less we're going a where of there's as and from is, the places aspect direct the that standpoint, profitable profitable, places country amount places more more have other inventory

time, at be opportunistic, we So, sites we detail in QX. will that obviously will this and to provide it's more hard

Itay Michaeli

second industry truck as sales XXXX that regionally franchise, and and takes just you And be strong headwind. pickup XXXX. there. mentioned truck detail still the I you a what and there you puts the would volume color industry globally? more Does do think on put Dhivya, be Any helpful the include not lower Can throughout thinking additional

Dhivya Suryadevara

Yes, that China have months go think volatile. we happens still see of we I think here in XXXX, here. to do remain to another what But couple will

here We're will put the before more And in guidance, with to, so we as few months in we remain anticipating. South next America past or tell. volatile. but the we'll it's too XXXX. around but the that still planning recent and have here here growth so any we're a And specifically are that next the for in to we're a than lower moderating United move to forward early States the year industry economic in going more get lower industry, healthy industry

Itay Michaeli

back think XXXX. Cruise July, would of driven the can balance share just terms they in Cruise testing I the and and validation accelerate update undergoing Cruise, half? on the in in you that of overall But in miles is mentioned second activity lastly that Any

Mary Barra

mileage, as to a their develop doing to the going well, and continue specific they not would need they they they are I economist but really would you summer indicated, say Everything's give as in timeframe. milestones the they technology. what we're do going exactly

on is the consumer So ready in community Francisco doing the the in track on and very and they're trust understands the to San that only make technology, much technology. not sure the but also work the that technology

are So, both those on track. perfectly plans of

Operator

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

Adam Jonas

or the EVs combustion R&D spend GM will and over five on next Mary, CapEx internal years, dollars more vehicles?

Mary Barra

I it'll EV. be believe

Adam Jonas

think internal do all And Thank is labor combustion else then EV that you less require do you. vehicles, equal?

Mary Barra

engine. I is light-weighting than you But you an internal simpler from to generally what the perspective, done component the little component is more light structures across perspective, and so entire bit vehicle. look that combustion a important body because Clearly that from have it's it every from weighting mean things light-weighting at I a perspective from electrification we've know think a an labor. key is requires

So, to last the you've whole vehicle, the look overall, I at system. it's I think propulsion but somewhat think just not got

Adam Jonas

on just, And Thanks, on Corvette. I questions not here. Mary. wanted couple Mark call have And I to a is the

So, follow what Mary, maybe But a up SUV? think we of him. do Corvette can with you

Mary Barra

not our franchise I I’m going you very strong. is appreciate talk core future… think that to about

Adam Jonas

I do.

Mary Barra

the able can’t outstanding I is be affordability proud true just is drive its’ I an the to performance think the CA you, the we’re to value, vehicle very for to the the and new something Chevrolet and bar really because world brand. think is I of wait then Thank set the and

just the So but core the strength at with the I brands of out variety now a and forward, convertible. variants recognize things of CA move you we right as we look will share then the including getting we we’re focusing the other and

for and about excited what will very that us. So, it product

Adam Jonas

about either Then that won’t I it. ask electric right say now, core later. for that appreciate can I we

everybody. any I for was or other that, market, XXXX mix the XXXX? what little China you were Finally when within assumption bit that we’re that think Thanks price expect you talking more Can the on if the headwind. on just headwind, was elaborate then versus I correctly mentioned volume what you or color there about that a on assumption China, China XXXX got

Mary Barra

that’s much look I going as there where the on trying now I call we’re the volatility overall think in at land stocks middle how economy. look early are and mean where you the going to going at to impact understand right it’s Adam, China, so is the to Yes. still of trades where we’re in to it,

seeing pricing of we’re lot environment EVs, and So, then we seeing And rollout we a look a also as margin are forward headwind to going we initially vital as we’re some see there. pressures. more

February but So, have that now those that in call that we think look I right QX, things you when that as for think we’re more color earnings XXXX, those seeing are all carry we’ll things into XXXX. do we we’ll at for the

Operator

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

Ryan Brinkman

impact you of light latest in terms U.S. SAR America? the while? the expressed of contract labor your that of the us remind vehicle estimate America terms North in Can accord changes North whether update in your new an provide on you and breakeven of downturn breakeven Could resiliency of

Dhivya Suryadevara

the to offsetting about is the to how Mary made level million million contract will wide contact of U.S. will not other comment is, efficiencies certainly This blame change of that. XX that the we’ve XX the productivity and Ryan, economics for previously what Yes. units talked basically breakeven that and the about is that

contract is assumption the supplement we’ve In a the of that are. is And driver to of from on based addition the happening maintaining standpoint benefits of downturn our that that in in to to what’s with level the levels ability flexibility workforce industry. adjust change what model certain just primarily and downturn assumption this based which they where on unemployment not go the the a

Ryan Brinkman

please that talk how in your based And in of you Can which market? has aftermath perceived with the and could outgoing And the the provide office, you I I be relative sales attributed including update think have that Architecture. in income products software GEM industry was for the or potential you finally us encouraged or optimistic us the would vehicles to products. earlier the other sales the you China it any lower not China and trade like detected banned extended regards demand, called you new to Could brands you the and launch release cost from year great launches your bias first update the if sales so an against the about attentions about prospect and China? expectation to relatively extent in have U.S. were demand in in to then on

Dhivya Suryadevara

all, really Ryan of and And seeing first really seen we haven’t we settlement. negative we that monitored haven’t sure. Sure, any

Buick XTX Cadillac there some and [indiscernible] as is So for the we as Onix, Encore, the the year. Chevrolet well. think that’s are Buick, the and products Chevrolet electric several very very the Trailblazer, of Buick And vehicle, Cadillac as the across in majors XTX. well the we launches Buick including Chevrolet had Baojun battery and Tracker GX, We with the then a XX And positive. were then, important middle which MCMs the and Encore Monza the then

did all or vehicles a issues at of say you So the the look to China the I economic that think family. we is it into issues uncertainty It's all and on launches in note they're with track, those global in one of which market were Onix, and correct have first our many Chevrolet the track. as of macro you China, on and is

of South the well my mentioned in at did in it remarks because America market we the that doing and heart biggest it's is the exceptionally segment. However,

these some get as more as into think And we see I see thought and think marketplace. a see did would lot get I than off we though, are we year launches as a significant on but them, of we'll I need we do the we next drop outgoing vehicles with the into So, to well, track. vehicle. think, the

Operator

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

Unidentified Analyst

[indiscernible] Steven morning. Brian Johnson. hi, good on Yes, This is for

production that from of Just wanted and up Is on that's pickup any to we capacity? XQ really drill is And took overall so with down market? work standpoint through schedule as the that if side max can on think that XXXX pickup at kind XXXX. already you Or no into an there especially large upside get up assuming loss say tentatively, in as potential pick a make to production, truck guess large stable pretension is GM XXXX. think fair it into I some that the we loss running TX the about of market of scope is we recoup, kind XXXX? production the

Dhivya Suryadevara

we have an and and other regular industry penetration scheduled, is these to level today, your what basis, already assumption would have we a a that in I we have that truck working overtime. time similar of lot can a overtime. On level Yes, correct where max we say plans

to limited. So, ability the days add additional is

try my this it's any to overtime find opportunities would do voluntary beyond I that, not obviously and at baseline point. will call but something We

Unidentified Analyst

for outside we contract thanks XXXX $XXX about impact, UAW gross about the revised in terms of the And up in labor inflationary impact then in Understood, million to clarification. XXX you XXXX. in kind ramping got of

the Just savings buckets absenteeism quantify dollar productivity other and if and some of kind then ballpark initiatives? offsets you the of that's can buyouts also correct, attrition wondering,

Mary Barra

is is attrition plans play well established. We the that. till elements have I we don't program know that yes, and that we broadly for the how exactly and -- more believe going productivity end find is can with People I think of of Yes, there out. the we offset given out inclinatory economics to the year the the contracts special yet said or really

think to forward from team committed as what you and though So competiveness. here a offsets and right us I that finding the go is maintain to improve our

Unidentified Analyst

XXX XXXX the was labor Okay, fact just that in that, in in in of inflationary ballpark gross up terms XXXX? $XXX directionally correct cost terms is ramping of million in

Mary Barra

Well, look at do they're that, think the I out. there's some I see think if that, look you mean, contract, but will others we easy of plays to parts math on. there's it to I the how And

out. to I'm we on workforce, put how forward, so And special go program, some the take projections far on many going of that depends that as depends not the on attrition people industry the depend

Unidentified Analyst

a And then, question. just last clarification

the upside restructuring target original back of include you've $X.X productivity that outlined? to billion initiatives potentially to $X some terms would provide revised transformational the $X.X of to get savings, billion, In that does billion? Or the the

Mary Barra

work I going, to then won't and we're when think we to to first going we're keep we there. offset stop going get

how how elements that upside, vehicles continue affect think and our and your build continue ability institution the manufacturing to costs quality our the we've we system. and design especially, there's quality I over improve we about broader So demand, to time, to improve, talked

It's revived So to cost for the end would to we the opportunities. things drive At cost push the that's on going from for improving all commit and to of round not we And related business can and it the business continue the organization value we and look continue say Detroit-Hamtramck. stop. going that goal we'll like based made, we of I find largely evaluate that to that set are although the shareholder XXXX. point, perspective. those an to next we into after We're to decision savings contribute to the

Operator

of question comes line Credit next Dan Your with from a Levy Suisse.

Dan Levy

Could gains. this some wanted more might us to or on on question Just be pretty follow able on the And productivity give initiatives been in successful cost saves pursue with past. to the you you've obviously what up color specifically, timing? you

I earnings been why think rather probably level has the elevated. of your one reasons

and of these exhausted. fruit easy Just going some already to in wondering have you're not how to much be gains? be harder may going the low little it's dig And hanging to to a as

Mary Barra

really job, it's of does improve. we if have the when of just, that. to minutes than not And We a much and we from and Harbour look design optimize we opportunities leverage we think, our comparison still I or Wyman I opportunities Oliver And Well, our at complexity way as productivity. to hour it's that guess, think I per a reuse. tap lot broader into we have

that from is four play actually lot years, of taken the a if be that because And it you year, it vehicle years multiple new pleased in the will two, a design when this so, years level to design I'm are launched doing very and things now that over out we now. the vehicle ability, three, manufacturer organization out will for those play that has for

level work savings that built well. vehicles quality the are they doing that's see station and built-in that the underestimate definitely there, are on don't we been And And more plants the for that spend, already just fact in means time we've no repair. because four, as that

So proud still what tap the that's of into and to manufacturing accomplished, much I they've team more I'm very of do. there's across I believe, although with we what and organization, engineering the already working think

Dan Levy

questions. what one in have publically of existential on the and stated future one and then footprint requires Obviously, that's as place of zero your of smaller you second And emissions goals, today. just and sort prior one a touching a more question, that's probably

any just agreement labor more your transition. And service zero limitations then future specifying with EVs? what is with current along So goal? have first partners of aligned does broadly roll, this on you build Will your for limitations with how you all, this this they ever on partner you on can mission

there is a future and or Europe it see as similar interest look with year Germany expires what in to this future simply once and Sort we’ll or agreement four of deal addressing it than to comes? is the we

Mary Barra

relates perspective Europe we Michigan, Bolt Well, dealing Orion with we look battery we we trading. already this it in at to what discussions as relates and electric Chevrolet UAW our it significant the had to to our build future, an EV agreement do the I tracking the in that from as are if think EB with going to plant very truck we’re in

first all, and think I we’re So, is is, there to do limitation. of trying what no

want manufacturing United I United States. to we committed but the to States are So very and to clear, in the committed make very, that

huge a among investing space. opportunity in why think I the we’re and the adding leaders in that's EV see and electrification We

have the we think are are I we’ve which technology sale that architecture the with BEVX. roadmaps next the that or for generation equipments going we call and well we we’re made for better position development, to

and what So, we’ll was but signifies as part doing this doing all discussions what be of I in Orion into the think Detroit-Hamtramck. and we’re

Dan Levy

how and plans out deal could in these necessary? beyond union that there to engine that of an other with have EV in world been you specifically presumably discussions the future there with more deemed potentially guess the sort plans I unnecessary. any Has are transmission on

Mary Barra

Yes.

it think engine when XX%, XX% that by into of is over vehicles being still rail you vehicles. We combustion the sold long XXXX, look see, in, that’s of a means very you even bells horizon. the the at country it the know, multitude in I projections all is

all well We’re to those very of combustion because that architectures will improve. renewed engine we’ve in invested continue position and we’ve instead technology efficient

components to that needs perspective from years So, and drive is EV somewhere. are the over there a out I build think an this play number to be unit going of in

the right from value footprint the company a thing do and for to looking and manufacturing for our to leading do drive shareholder So, to things EVs employees. perspective I we’re our think right

Operator

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

Emmanuel Rosner

there more there that's it excluding guidance. any to the provide can that you bit and to hoping add reflect Your, this on underlying like end guidance maybe XX Is of strike, you that what your impact color are a again, to then in you’re it the at China? is that the for XX lower Or have expected specific original correct? the on sort seems U.S. I fix strike that see backs extent end anything? is trying little seeing just of Are Is would playing lower was I revised tax this to question at performance you is impact, there the also maybe before? be anything the the excluding softer just possible? it mean the that that? strike And you is part better new year of rate, account guidance to of the understand the as tax rate that factors international?

Dhivya Suryadevara

Yes.

as so me $X January let upper seen as gave it questions offsetting was we’re $X.XX of you’ve is South gave end guidance guidance the picture number we new So, we quite clipped guidance volatile by correct, on volatility FX in of we've America original $X.XX we’ve address as the saw the a year, we in that some to $X them well from subtracted when which as there, microeconomic that of the $X.XX, FX it’s The earlier our its’ today, environment China in very seeing well well. you’re as arrived -- that we we have the been less one-by-one. so the the and in at, different environment

impact, And volatility continues that it the So a strike impact rate the quarter just I to U.S. more would rate, be got it is XX% apply predominantly is quarter, front, you America the North from revised the that seeing because the is to effective strong. say tax the a applying the to that on after is we're strike tax that From from perspective, there. as rate about the primarily perspective performance which seeing. tax weakness international rate we're

your the out UN original take guidance. tax impact, you our that's applicable you tax strike our revised if to on higher So subtract guidance, tax rate get

rate you're the It's rate average it's that consistent. tax applying on different tax than a impact. So weighted strike the just

Emmanuel Rosner

and I terms which give puts a then for downtime anything size tailwind, year? year? would a quantify materials able charge potential And then year obviously And as bit fairly an downtime about up impact raw And and in how of that update is the it in give little Does you next carryover be more what hoping was the the then I great a quarter. of a color discrete if you're SUV, about not full few as we move curious particular, can items, on you just that's and discrete the think warranty, there? the color. on specifically big you this in have explained, mention talking for you're represent sort was ramp items Okay, XXXX. into you to next takes a did to can for for then And

Dhivya Suryadevara

a lot a the next on complicated that's uncertainty SUV and I characterize size of headwind. current From So, the would XXXX full generation. a a I of takes industry the globe, downtime to around that's a change as the from SUV side, puts significant predominantly, standpoint, this gave happening There's generation what primary that the is launch. amount

be how downtime, a size I want put importantly, from the XXXX. don't for we that quantify as in to as the out more downtime since now SUVs. full additional post still going that we're can perspective well on we're optimize to headwind units the working number up year-over-year, ramp So anticipating able line of we're to an rate

assume that headwind a safe further will year-over-year it in to So quantify there But that I full a SUV is from will size perspective. be February.

been the well. to with also CapEx depreciation. be that's XXXX into seeing this been level consistent a secular going year. depreciation we've quarters every non-cash, several will if That's And is and you caches in as obviously our single past our know. has higher up continue There as something increase And will to

a spend. takes, to with to same all paint have quarters, this hard steel and and I it's metals, your and point, which there's From seen at as just and brush. costs, impacts said tariff offset in before well perspective it prior raw by tailwinds number as look But material logistic the we tariff puts precious our one aluminum fuel

XXXX a that moderating, continue be that likely see don't tariff to at necessarily I we're mentioned year-over-year And standpoint, that in. from headwinds And we going into we million since it's still into so are environment XXXX, XXXX. hard headwind obviously predict are the XXX to to net-net, the

savings achieved that's our $X.X of to are So close guidance. we've remaining to realized the the going time, tailwinds and savings over to generally of be the headwind, period remaining far, billion so cost saving according cost revised a cost

have to this year about. talked you You're some of a the going trucks heavy-duty and Hopefully gives full launches color. I that product

into And XXXX specific don't on that tail finally on the we year, had, that. warranty question that you see QX do see to of a a I this event

Operator

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

Chris McNally

just the to working So X.X, capital from on cash maybe the free wanted jump than looks in change operations. worse like impact and was the standpoint really guide? quick a the Just it the just flow on X.X of

not sort there's capital. on confirm other one out cash and that a next time the back the billion just about you to flow we're the billion was all You capital any CapEx, like $X.X reversal something looks think like working it or trying $X of drain year? drivers working Can it for because

Dhivya Suryadevara

or about to one of of set prospective would that the That, it's I working out but understated the so low potentially profit capital talking on because plus talked the there about little number unwind, rate. say from the Yes, there. for, seems impact an maybe be else net that's whatever There's income X.X. end constitutes item like impact that that you impact your but you're you a EBIT sounds to tax the no up time most about going talk EBIT other us growth

Chris McNally

in the through but reversal like could we that first give you And standpoint? numbers sort talk want without of to out how the about we some about then could if you play giving just half. timing I time an know would the walk at when think guidance, from the of inventory

Dhivya Suryadevara

about talking recovery the of or the both? profits of working reversal or you capital Are

Chris McNally

reversal of capital? The working

Dhivya Suryadevara

of and is going the of after point payables unwind, cadence think reversal continue. and we in days as that XX to start November, rest back we will working receivables sometime start cycle we will the that be up So, low capital, shipping, to probably the

the recovery be So second cash think November standpoint anticipate starting of next that of our part cash a recovery quarter But that. rest the half to because in And the as of of XXXX. do year, into the would and QX, the know, in you that is the we what a it quarter shutdown and tends of after you balance from reversal see into second you negative December.

Chris McNally

like XXXX a the on was year. this I communication then is supposed free And be better standpoint. of from of perfect cash maybe already mean a more That's flow a sort to timing.

for I the we we and question asked and into that of and understand we that on the the getting But that working, a now then can So attention XXXX you will actually of which a reduction benefits it to CapEx the the be XXXX? working times what operation? income of thing expecting of of will out, fact that capital benefit working we sort in think already could out you something XXXX, cash is the as improvement likely couple one were of start different we so you're that statement call that is street in is and call. this If the able capital XXXX, wasn't the flow go dividend. to get true because one FinCo core type from be XXXX

Dhivya Suryadevara

is will XXXX the how you of clear and what about comes guidance very much based the cash we i.e., be will if our of the how flow clear that year-over-year. flow capital working from about will cash operating cash we be much and also Yes, earnings free rewind

right that that from about So more of beyond and communication about standpoint to magnitude a take that much we’re February. be want you’re clear we don’t certainly until

Operator

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

Mary Barra

thanks much morning. and this for very you participating everybody Thank

you discipline will decision our of resilient If has launching been making sedan. the business look continue help this we impact more Cadillac tough the years, trucks, team heavy-duty to agile. at overcome more several and General new make our strike for This us the Motors

has and work to they across employees they to have be they and the to to every day General the navigating forward, issues, as confronting do of of full-size believe such their generation complex record a work we the upcoming as capitalizing opportunity. successfully industry team the to launches and And headwinds This the want best and Motors Corvette on of business that in want we successful And a best. proven They next move board. I SUVs. track mid want come And engine leadership future. succeed part

we’ll to foundation the AV our working February But clear, additional Markets allow and move to Capital the creates details know in providing me And let EV continue of will Capital core together, want world Company. results. as we to I about that going in This will on build full value. the and year our and both Markets lead Day before in future future. in Xth, forward So we we’ve near host share outlook, XXXX. year addition the on hard let And we’re close, and on you the to be our and strong laid New we’re also success XXXX them I earnings and York significant to shareholder Day it share XXXX our include to share the QX

thanks I everybody time. appreciate very your So much.

Operator

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

General Motors (GM) 29 Oct 192019 Q3 Earnings call transcript