GM - Earnings call transcript Q2 2020 | General Motors Company

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Operator

Ladies and gentlemen, welcome to the General Motors Company Second Quarter 2020 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded, Wednesday, July 29, 2020. I would now like to turn the conference over to Rocky Gupta, Treasurer and Vice President of Investor Relations.

Rocky Gupta

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

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

via Suryadevara, this at headquarters President CFO. GM's Barra, Executive also Mary joined and Chairman GM I'm call Vice are here webcast. We CEO; by GM's broadcasting today the and Dhivya and

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

Mary Barra

care made in we do everyone. has Rocky, we of for COVID-XX products, begin everywhere customers allocate joining. this changed thanks our and we sell impacted of how us I'll It forward. influence has as the quarter most has the our future we each history. work, how much, we so spending way one good we support our COVID-XX the challenging changes morning, Thanks will for move how with other. we business. how these Many which and pandemic,

transformation we also enhanced. business stayed to that of the years resilient, customers made with we with connected our While offset these more contactless and took tool Shop-Click-Drive company steps proactive Dealers additional actions help challenges. our online

our restarting chain and from customers build equipment our employees with the China protective and unions learnings and significant supply care governments. our ventilators begin keep with operations support dealers We remained operations supplied safely customer and personal after-sale South for and and used to America and first Our responders. early to to America in our in our North needed. repair Korea open maintenance rallied proudly And parts our

and to of confidence with the extensive levels to these safety our ensure stakeholders We in highest execution continue collaborate measures. of

and the ultimate and in continued and all put recovery economy, to predict appropriate health the on of we place the for measures quarters impact can't and public trajectory the company virus in have third we its While the position beyond. fourth

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negative market. EBIT-adjusted of Net billion EBIT-adjusted let's EPS-diluted adjusted ROIC Now brand X-quarter $X $XX.X particular basis. our of automotive America. We was Steve the margins Carlisle our look strengthening named important cash loss ongoing the trailing Cadillac President of and In record adjusted experience X.X% million, flow at had America billion. accelerate North America, of of an a North on as negative very loss GM demonstrated was $X.XX, transformation, track part Steve and numbers. X.X%, in revenue of our North progress of adjusted $XXX will and of

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by September currently per SUV increase full-size employees U.S. output plants X X, Fort Another To in demand, X,XXX positive and full-size will development, our are truck meet shifts. XXX at effective we month. will operating the units add which Wayne

up now using the Customers our prefer delivery XX% on to business this are CLEAN with visits We as are visit as who our us. year, choice to want tool they full-size dealerships. continue a includes how physically taking well those to SUVs. offer the This program of do where our customers all-new of for Shop-Click-Drive first

selling get, new dealers design and and of GMC profitable Yukon new and praising every vast ride the can initial sales are they are are buyers Tahoe and The quality. Yukon Denali. the Chevrolet highly Our majority outstanding

production orders We going continue XL. begun Escalade. Super early. and books. Chevrolet the Among XXX-plus including new generated on-demand well, Cadillac models offers new starting launching interest GMC enhancements, through on and for XXXX Escalade the functionality. the most its new summer, we the Yukon anticipated It's the available building industry exclusive has the Cruise ever technologies, lane also Suburban highly the anticipate already Escalade's including We've regular with change consumer

Buick, Encore the Nearly highest-volume XXXX Study. other attracting both or Buick Encore. month, opportunities auto and XXXX GX buyers. was Chevrolet -- for addition, and fast every SUVs XX of buyers In the GX market new Power at are gaining GM X/X Trailblazer brands. share quickly highlights, America in surpassing become was highest has and small ranked younger, new Quality younger North Initial Both are maker turning the are and Trailblazer's highest dealers In J.D. the brand's the Encore

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in well which app OnStar based field the to with billion outside GM $XXX the lead XXXX truck first This a It ZRX In GM app June, X Chevrolet is liquidity safety GM's business $XX released vehicle won mostly off share segments the XX-year Guardian in we our U.S. midsize select and in the the history for loved quarter, at GM the has leverages share the owners time contract new in Colorado squad quarter in allows achieved vehicle. production of sustain top and inventory bring X and of off-the-shelf new models of to million and performed to the Army's retail in end. OnStar Defense ones. to X. brands architecture the Financial, placed of them its parts. XX% vehicles. Our other and build, commercial access

GM roll out to customers it our So far, will more and we've entire owner onboarded than population. soon X,XXX

The to international Turning business improving. environment in our is China operations.

than portfolio deepest impact domestic transformation costs and To automotive sustaining international the its success the greatest Luxury, been quarter. to markets. in leading In while nearly gradual positioned, to levels. its Yue the America, Dong in ranked plant China, and on below time. segments, foothold highest commercial including the recovery all-new manufacturing over February, the leadership market operations, year-over-year, Initial SUV are In the the seek on nearly Korea the in We operating in the the MPV are strengthening more recovering pandemic the Trailblazer export builds are MPV Envision, world. showing were GM's macroeconomic Envision. of and sales sites GLX SUV recent the market facility business, well South Buick strengthening J.D. month-over-month. Wuling Yantai, Following the in impacts plan we passenger entry. pre-COVID grow and increased in all in efficiencies, of with reduce all-new anticipate for line XX%, the segment with Buick of recovery. Study, FX, COVID-XX and in continue. Onix capitalize The recent was XX% Domestic we sales launch up which vehicles in remains of have deliveries the Quality Power Its continue North position the efforts grew demand, X% Avenir will new sales family. its progressing with manufacturing counter Tracker. restructuring is with our conditions Chevrolet Elsewhere which

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to talk I'd and our Now EV shift like progress. about

The and pleased visit to our progress a stakeholders enclosures. to our Energy in EV in EV about the also Secretary during strategy and will our this next and team that we will less in of Ultium global stronger The accept coverage lighter, encouraging, U.S. of the expensive host team Energy. positive Department Tech month us battery showcased demonstrate is continues to our technology Day important this next-gen month develop design were EV We help share in technology our market. by in award a and with battery our U.S. EV a Following and platform, China Day markets March, the media portfolio.

on we've Site on erecting ground We and our Chem. Ultium steel the we'll and partner, already electric luxury GMC sales making X next-gen reveal and will upcoming The foundation based platform non-luxury, clinics. the highest also the today. prep the and in scored building April, in in Origin our are first our of QX; of the AV luxury facility significant Lyriq Also Cruise progress that in highest-rated our be work EVs Lordstown, terms LG the interior EV which in began system. of building joint crews venture SUV America also in North and July Cadillac are It our battery vehicle Ultium begin HUMMER revealed any Ohio with track exterior tested will started vehicles, next vehicle on Lyriq appeal set. confirmation shared. week; among was EV, data clinic in

in by more for Our EV half sales the -- in the the year China are overall first year-over-year than with half growing up deliveries and first portfolio of XX%.

and charging EXXX Wuling's partner our DC phases Buick which electric Plus, And launched the and all-new New Guang week, EV. early Chevrolet last Buick's entries the JV of SUV. launch, all-electric with first in all-electric first is support and models, the an Hong in Mini EXXX charge Guang the fast Hong hour, X, minivan Velite Menlo, include Baojun and we the which

work, as its to strong and call relief year. to is updates XX,XXX the Turning Cruise test second in of need put efforts. half expecting fleet this COVID-XX the people of Cruise in autonomously the With I'll to than over turn Francisco San to in to progress, that, AVs. technical we're delivering continues Dhivya. making more exciting part some meals

Dhivya Suryadevara

Thanks, Mary, everybody. and morning, good

Wholesale America most quarter second quarters times weeks in one due XX%. in production challenging the of down North with COVID-XX. recent out down clearly XX X to of was is The

specifically strength million of flow we've of near business, America, the breakeven excluding North business SAAR, working We of global these of capital, past the XX few flexibility over even free EBIT breakeven cash U.S. years. of we the XX million breakeven the levels million conditions, into SAAR. U.S. XX in North proof these the However, points demonstrating and results American view resilience under managed were levels, to as that built

sales even and below backdrop of performance highlights importance quarter's and sheet. very balance strong quickly strong move at preserve end a to continues trending inventories. of XXXX better the be recovered have amidst to limited levels a from liquidity to second July, April of investment-grade the Automotive billion our the having also at end to quarter. liquidity the lows Retail $XX.X of around second quarter XX% in This ability at

inventory levels, its watching steadily rates current expect Clearly, across cautiously continued recovery know, about country the infection a and it's optimistic to the levels impact recover U.S. we We and the you from in auto fluid remain very on demand closely. SAAR. and we're as situation,

for in in billion add quarter's burn from quarter the the to of gain me $X.XX an that billion. Let cash the billion benefit burn the you planned you. of our out line in the scenario the we with PSA cash in was automotive of $X.X of provided results quarter. $X When the was liquidity QX billion, the EPS-diluted total free frame last actions, the $X negative flow adjusted includes results quarter Adjusted $X negative for $X.XX revaluation.

cash billion that better sales, unwind and was were allowance of since cash our Sales Let was expected. dividends of of scenario also line provided. in was higher China North in better-than-expected expectations. some later that $X million vehicle high you with than unwind of the of capital supply American our and last constraints of OnStar I Mexico $X.X and from billion production the CapEx drivers billion due in against costs billion $X better of quarter. scenario than retail GMF was chain scenario at of the and pushed $XXX to than expectations to billion quick me the laid give of end was performance. June. out $X.X flow sales Monthly a Working $X.X we aftersales comparison Contribution the

a So billion, that to when that measures working have you run And excluding rate such, managed this QX all about. breakeven aligns note not cash austerity together, scenario in $X It's capital, with have environment. flow put our talked was as to basis. burn go-forward we a of implemented we extreme of which important on significant this this is a quarter

Let me touch regions, North on the with America. starting

lean from performance XX.X% despite inventories. full-size sales share retail was year-over-year, While retail down XX% market pickups of XX% to improved

July point of XX XXX,XXX levels lean to inventory units last compared year low Our XXX,XXX XXX,XXX QX at the and our in early at at of units remained end June. as units of

which XXX,XXX our XX. and This June units truck to as XXX,XXX XX,XXX last at stood units inventories, rebuild point. continue compares our July pickup We low of at to units

actions We inventories. number a take replenish dealer to continue to increase and of production

our it We supply where have returned all the in most. rate plants facilities, our with building demand full-size to in matching a truck we need of and normalized inventory are remaining run

Our by and is their are disciplined standpoint ATPs mix. rich up underway driven per of faster. inventory, deep $X,XXX dealers can selling light-duty This into initiatives incentives We're as over our are doing quarter-over-quarter. a well logistics job with rebuild as we many to great go-to-market also inventory optimize so from a low there unit

opportunity of advantage for traditional the SUV downtime May full-size we're produce very retool. through a shutdown. going to has smoother allowed in to take and and launch Our is to the transition July This well, able

dealer due new and to experiencing has units as still feedback been been launches the opportunity customer a would an has the the plant, trim been constraints to we're otherwise through at average at working very the the lot well. vehicles have simultaneous July that SUV strong, to ramp-up While lost. very rich provided have same build and very quick turn mix SUVs The

and Our Sierra with up retail and market year-over-year seeing mix Denali well XX% over Country trim We're LTZ are the heavy-duty and XX% ATPs and strong mix $X,XXX of trucks performing a for the with up for of High U.S. share exceptionally XX%, X mix year-over-year. Chevrolet. of near points ATX percentage also new also

these as a profitability. in American to launches As to strong tailwind we will February, mentioned continue serve North

as signs of Let's and market equity million move to the in income launches. GM International. was recent $XXX China recovery benefited showed from QX we approximately our

our with reduction continued cost measures. also We

impact the income of we year-over-year. the being virus down and wholesales For achieved HX, despite breakeven equity XX% the

run and the to expect continue $XXX to quarterly income sales rate. recover, we million maintain Our approximately equity

challenging. in time as new earnings SUV luxury We China million and industry expect over remaining from operations eventual FX models year. China the QX this dividends to environment related production recovery. experienced the from the We and second to benefit the and In America, improve we and pandemic, expect in in $XXX we introduce of an received has lower dividends South half more become

However, we're to continuing costs strengthen take the and out. business

on and market. entries new our received FX. platform, to by SUV the in do our South close B on the objectives have segment share at B mix America, our volume in we're have vehicles increase achieve X their Onix take focused car a well redirecting impact channel price, Furthermore, vehicles are helped of retail Tracker first and We're in that new to offset Our Brazilian These been channels. leaders the profitable respective channels continuing not look especially Brazil, towards and margin taking and the segments.

taken is As an following. price competition XX%, example, we've year-to-date, and of increases

taken, business which closer to on revenue we've measures all with well austerity this cost get attacking will as really breakeven. we're So the side, as the the side the

Corp of from Cruise At we've sales GM GMF, strong actions make traffic few me XX% Financial, ago. vehicle up on Let to segment. dealer XX%, drive and taken comments the to vehicle a U.S. million to GMF's and led lower penetration year in prices. used the year-over-year was lease QX, and X% accelerated credit XX% to of about $XXX talked provisions higher had depreciation portfolio because a we due decline on pandemic. EBT In a the

credit $XXX expectations. including We QX, including the expect to we in million consensus continue QX. persists. Given now to billion achieved of in expect with our million billion. recovery million, end second price update we X% segment And and in the slightly Cruise Financial stronger if to Corp We impact towards half X%. recent costs the used costs million dividend $XXX $X.X investment. industry X% in favorable our from million the the achieve And from range XXXX, savings in performance initiatives. received were $X.X the $XXX $X range expected of cost billion for a low X.X%, points quarter, on PSA although the $XXX down $XXX since target to GM starting environment significant consistent net prices to Quick transformational of charge-offs of vehicle to QX, a were

cost measures allowed across our the the and normalize, board. spending front, as include that you amount budgeting some It A of the and On stick. zero-based reduced expenses travel efficient the reevaluate do reduced will significant to majority event of put these to will too efficiencies some us opportunity but We expect. spending, has austerity can is examples soon dollar that, facilities on expenses. a marketing think

environment of is official our as up it to ahead our an in let the know, But provide fluid, half dimension you guidance to flow. scenario second a XXXX, looking profit cash this me Finally, backdrop. and and to remains difficult frame the

SAAR a factors to QX shutdowns U.S. the end by is experience slightly in neighborhood adjusted reductions billion, units XX -- the in these second timing as of to billion the and range free demand to meaningful burn. XXX,XXX production allowance billion mind, given inherently to billion. in in assume well of a of a QX scenario significant with be levels. we in demonstrates half in and $X as $X this we are and billion November of volatility we by EBIT $X scenario, company of $X and in which me, HX, billion expect you plant light $X If of cash X to is HX supply than not rebuild approximately HX excuse HX, industry The capital and in million vehicle and we or In guidance, disruption flow assuming global Keep this December. sales to inventory not a CapEx total the $X due holidays to stronger recover cash working can be and do of year, to dealer generate a rewind to ability expect not approximately predict shift a production the X.X the scenario, impacted portion difficult

also working rewind, normal to into the know, such confident are number business. austerity make you inventory a our environment, the lead And investments extrapolate will in year managed retime we deferment company of of capital the a this keep would But XXXX. funding of be this we're It CapEx future. the is that to generation flow in strong in to there in into build, difficult as factors noting potential As scenario expect spending we spending use as that fundamentals cash measures to the the worth XXXX. will it

However, over our the to CapEx X-year period, still target. within we expect stay

impacted So significantly in can time. were the through summary, how pandemic, our a QX demonstrating but well challenging we're we by results perform

flow and we've has resilience the taken cash breakeven on helped business. certainly the of focus Our the improve the to improve steps

to We mobility. win continue performance position will strong the focused This move laser and Q&A of call. portion to in execution us opening concludes generating comments, and we'll future the be our on that now the of to

Operator

Instructions]. [Operator

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

Joseph Spak

just is be or -- you provide EBIT, half the that that a an could more America back implied half. bit EBIT? what was the that back Dhivya, And or last the maybe comment total color North if on clarify would to auto in EBIT a maybe little EBIT

Dhivya Suryadevara

it Joe, total So EBIT. company is

year-end, it's in that gives So to number I model with think to a it enough assume a position want GMF. XXX,XXX-unit America but as North put well includes that, safe data America you dealer by I auto to inventory points specific. to North it, specific as don't

Joseph Spak

then cash the flow And the in you talked back about half. Okay.

talked other the about million. $XX some of in potentially think you comments, paying revolver I back

$XX billion. So --

to pre-strike, any considering? 'XX of anything So it, puts occurs, be that, that of almost sort cash call the quarter equal and there? you're if should other let's seems or there second doing Am takes to, Or missing levels back pre-COVID. I'm balances net I if it right, math are we

Dhivya Suryadevara

I think you're directionally correct.

of midpoint between about of billion, scenario that see the based $X think billion and you the half we're the of on billion the we a bulk range of can burned year, QX the QX. burn recovering of in you provided, HX the first And to that $X the If in I year. the $XX

cash as Joe, revolver. know, So that's pay towards the there's as back uncertainty there. expect we target we build to Obviously, level, you that's back out the of balance our a would ton when

about. note to important assumptions that based it's and I all So the backdrop it's on that talked the

Joseph Spak

Okay. for Mary. maybe one And

for architecture, lot You Ultium lot that about EV talk also I'm to I risk it maybe But if -- to or very well. a of trying companies, you like we're seeing competitors. and more is have a would how kits or sounds comfortable guess, your and it. know you break excited electric agreement guess, the of automating an and about vehicles you're into Honda would I what the as selling and wondering ever sort them. of opportunities, consider I with value you would-be some

Mary Barra

Ultium think very and scale and does battery our cell platform matter, are confident excited and We we our about technology.

days LG We this plans X platform, -- -- are a of that will we stated country the technology of R&D at building cells that with we the in or development have along auto We've just new we cell Chem, the an from cost-down XXX. from be we the that perspective. agreement off have. battery work have a in we X with as Ultium that the of only perspective. below And of our that's battery launching are early joint early start also And

we we, you one evaluate and Honda So with on provide have arrangement cells, mentioned, an only each individual to and our as an basis. opportunities of but leverage platform, Ultium these not

will business. to it's shareholder think going core key and negative generate protect the on evaluate. definitely franchise. will we have impact our value franchises, additive a doesn't And we truck that's but We So other be something

move open have think leading remain we because technology. as we we forward So we

Operator

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

John Murphy

in on aided mean, first that with have pricing should I question relatively in inventory Just tight, strength the obviously, a quarter. that. the

think if SUVs then just you'll much But you much you're relatively So year, increase of the think the get And end leaner I getting the talking think today, now inventory is you a support going as launch. units, how XXX,XXX which benefit and consider part that about also, that, through right relatively forward that to still curious price to how it. be pricing? you sticky, of about level back might tight is inventory tight of might the

Mary Barra

Yes. well our say contributed both as majors as to was carryover it John, I'd that positive the quarter, on in pricing. --

On you helping we're have the and major net side, from as know, Trailblazer which received been well, GX, that's Encore price launching really and perspective. us our a

it's the maintain particularly of On side, the full-size pricing the go across board, SAAR the we in point, the will but forward, what to carryover level pickups right like. levels to your that to is we environment we're able on as And have calibrate inventory based there.

needle in got of as and second on that that As you between what competition the continue that trade-off a profitability. own that's And a we it's the is half levels do and share year something the appropriate basis, the market inventory know, watching doing, quarter-to-quarter to to we'll well our and as thread, beyond. you've manage

John Murphy

the a And that helpful. second saves billion. in the then cost in release, I question, up Okay. on you're the quarter, That's to mean, think just you in saying $X.X takes press $X.X I billion

getting billion. $X.X So $X pretty far billion way to the along to you're the

how down guess it's $X.X go. a so just of $X impressive. down crossing there of against question of timing. as line. you temporary here more just finish mean curious route might semantics it's reaching billion Or and potentially I pretty of line is go was the of be point. that seems chug this to there it of you on of like And on might this in more sort the you're if up kind I much I'm kind efficiently the be far cost? just to you quarter So at sort limit how bumping billion, of It limits somewhat an [indiscernible] running are and guys And can

Dhivya Suryadevara

Yes.

So those getting permanent billion that in November $X.X to to about. making we've from what I'd the progress are savings we've to, alluded been of billion and XXXX, you John, were billion we that announced they $X.X of in a range that $X talked part say

savings. those categorize I So would permanent as more

to that's addition pandemic savings place on, categories. it where that in -- given quarter put got in we second austerity in at you what's the the In look that, two to going the and

going of the naturally, category, be normalization will there that up. production back First a with

were So salary for restoring deferrals those original temporary. we we're have that example, to the extent to announced there are those that the levels, recently

we original back there. went to levels So the

normalization, But you them will what with or also majority travel, event a at back. facilities working and significant can of as low see single of on marketing it's every areas, going expenses other there. a you So do the imagine, one and that looking we're we're the whether more spend is, to zero-based from as perspective

to I the amount, difficult we it's get be to seen as will So it's cost the said, to you've safe a dollar it. performance quarter say efficiencies cost in put but from a had, standpoint. If there's

John Murphy

app I discussion, you're like a seems taking in towards direction. the OnStar and outside the more mean, on moving lastly, that's an vehicle, stand-alone just more on it available phone then And the sort of Okay. this

be line? And to what a a that means, family. point GM separation the some curious of really this precursor at down the folks to Just available going if outside could be it's potential to

Mary Barra

business. full So the we do, responders the the and what more will we have, vehicle. first think integrated is I think additive that John, it's building the power There's throughout at to be OnStar OnStar very looking of we we're plan connectivity lot leveraging the a country, a have with on really we and relationship with that

nothing about separation. to the paths at to look we'll talk but have related So both

Operator

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

Adam Jonas

-- the has wondering of name years. -- I goes it its do the GM brand, business. but the entire I'm might General out call the is So bear really not back job, taking -- just change with some The Motors Why I XXX of done of me it's -- follow-up. done have Motors on What interesting mean you I Ultium, the company first not touch why think, if you're with question. a think the directions company? the And General it the be company?

Mary Barra

I believe to I'm value When look -- make as and shareholder at drive it so input. technology necessary your appreciate electrification. Adam, going -- our plans name to strongly any the relates the changes product we're to future because So and change a in

something that's that are So real. makes at points time and we it evaluate the when everybody look proof what and right it is at, and looks that the

we our strongly so And believe EV future. in

Adam Jonas

that, Appreciate Mary. Okay.

then. melting investor the or a the to EVs realize, speak. mean people as CAGR you vehicle. other sensational. the of some X% just Because companies not never much more around ice the cube, so -- the they so around worth made excitement the Rivian I business that Just And so GM than follow-up the after CAGR and are talk high a much known and negative about higher-growth XX% are there's That's valuations as business. business so going so of enthusiasm

I'm just biggest radically here. doesn't you the see the as perception? your results, are that singling as group. GM gap. you From you that CEO large does circumstances, in from need thinking, to to what set care. circumstances, a of that I'm GM I'm tough results a out big gap? look tough do opportunity good a under your the And many one So your for to specifically, Again, reason change alone, not to at of real guidance the What's but this what like investors And company pretty mind, because a gap? reason, for this the seat, under really, today's degree, is not really market and peers, seem decent you're biggest of It's

Mary Barra

strategy. importance some I it's of companies And all at electrification of look validation a so that attention the I you when mentioned, on of think the the the

it scale see manufacturing bringing, as I relates to technology that costs. think move the we will people the strengths we bring as we're leading forward, battery capability, all

exactly to keep got to telling story. to deliver, We've got we do. we've our intend So and that's what

We have announcement week, one career next the XX-year Lyriq the is clinic I've customer my a seen from highest in of vehicles which perspective.

steel HUMMER shortly as said, fourth share to more battery and have today. The quarter. plant the We in raising reveal I on very the is

going keep have that to buy. just products want we're we to and demonstrate So people delivering

Operator

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

Itay Michaeli

last working the how the but to if do outlook I strike? and back year-end, you much mentioned we you capital even accrued of to go Dhivya, expect in think recover year's commentary, by roughly this

Dhivya Suryadevara

Yes.

in So a sales $X billion capital working recovery the about of a we're assuming, perspective. of Itay, and outlook loans from

way half working it the first And experienced to recovery from happen the industry continues relates that burn we all the a not will to we're of So in as back as that capital. cash normalize.

-- way it and neutral a we it to burn you're year, saw of as the first XX capital and So if think roughly million the to is as neutral gets the units, almost you at about as half closer levels. it's based way a timing of about levels the getting it like know, linear as of million, on And production to back of and well. also thinking it's XX production working

Itay Michaeli

situation cases. the Great. you then globally, it's seeing and rising recent even demand light if mentioned of COVID in the whether signs, weakness any just you're nationally That's retail or just events? of And region, helpful. just any the -- I'm curious signs by recent of

Mary Barra

we America, as China, United expect due see in we North of slower Itay. COVID the No, improvement optimistic we in We're America. month-over-month severity the not South cautiously to a improvement recovery see bit in continued and and States really, as

Itay Michaeli

Okay. just particularly few the deploy any by spoke for to companies spoken on opportunity them past wondering about if one then in And committing months all-EV views there's EVs that, about past, lastly, you've the rideshare rideshare And to networks. fleet I in the updated the with an Mary, on know XXXX. we of and

networks? other rideshare to updated might Just thoughts curious around deploy if how look on there's you any EVs

Mary Barra

don't us. opportunity. an very I but announce opportunity anything much to And that's think an have I today, for specifically

Operator

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

Ryan Brinkman

performance out as stands America impressive. Question, really North very in the

year-over-year $X.X that most margin looking quite at of the revenue, decremental the in would leverage on has a tracked change it -- in operating divided order seem other I year-over-year change in billion somewhere bit XX%, billion think versus higher. by in the Just in revenue EBIT quarters, EBIT been declining $XX.X

of don't much expenses sustainable? represents better you So less billion clearly, $X.X of break down cost returns versus, this able cost seems that cuts, the I a have us maybe back to maybe quarter. are don't in how which to know, as that Are performance of you sort added result of us for that maybe other be the billion of or cutting volume improvement to help understand cost there $X.X need found

Dhivya Suryadevara

maybe product to our about cost say, HX what but time flex I as into so, this, or seeing. I Ryan, structure cost difficult, a amount different on or as retimed also in timing, put America that to into call It's year. think which you're bridge, seeing portion able in North Yes. quickly is would the is it, trend get And next the well of $XXX a dollar you but about the think a million will period, though, really we're being margins

about about you to think both been heavy-duty change and Last if future North an it, As you us launch SUV downtime taking over the think perspective. going the X we've to portfolio. we're America, downtime for behind margins have years, entire from

forward downtime, and go cost you continued on a of transformational whatever perspective here, as cost about So execution you the sticks efficiencies lack from of think savings.

and you demonstrates America can that power of So see be. here, certainly the this tailwinds quarter some you're earnings what seeing North

Ryan Brinkman

if then add coronavirus? be sort employees when as America or then you long-term don't margin for sort plus supply say would the post-COVID And GM lower, relative XX% for together, back to I chain that considering unchanged prior today would any all to such you Great. or Okay. costs and North just of PPE also is come the, to your your need higher of outlook to that compression, leaner take you of and do learning know, maybe costs it

Mary Barra

I would unchanged. say it's

focused COVID efficiently providing other with obviously see do we on along safety think move costs to I that as and the we've are able cost forward. the opportunity I and been more I right very -- equipment, we think but

Operator

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

Emmanuel Rosner

investor this a become advantage and cheap to look also cheap consider some capability high of assets many Mary, for be about these frankly large for established as of seems off that when appetite There to So can operations separate you valuations stand-alone spinning capital to such the companies. spoke but But access vehicle start-ups, unproven make ones, into market electric and entity? capital at strong we vehicle has companies we some discussed you competitive GM's also earlier, some access of a before. electric these

Mary Barra

evaluate are always evaluating and anything going and Emmanuel, to open many different say is evaluate scenarios, so have we to anything other to looking further think value. I at are we drive that than we don't long-term shareholder

table. is the I So nothing would say off

Emmanuel Rosner

sort just together, Okay. sort talk it I that bit into factors guess about a complicated? any integrated come Can the impediments the are like way sort of or other there things are or of you little makes like of consideration? technology

Mary Barra

I you, And what any are value is not maximize -- I'm the what impediments. sure be to look potential the way don't you as things but think going I hard it question -- at I impediments. was at your hear there to is -- asked, creation. look I to

costs that technical starts, So at I building It and have think there's capabilities. our strong our on the we and that looking many chains as are we manufacturing capability could different as all though, we with take. execution well supply

So any see specific really I don't impediment.

Emmanuel Rosner

been scenario. much your there's running in truck as half matter very you've lot GM. expected the your where has amount first hoping XXXX, pricing of was scenario 'XX. production be is of And strong half years a feels put then, scenario, the cost. since Okay. It of half I many yes, to the is all a And out really historical at great half for but Obviously, there's second under upside second of historically, half it's first for But better, or for But then. The GM well time, that same tremendous taken back a done like versus product EBIT out. then lower, market is Dhivya, that 'XX, of outlook context. to

and just put maybe you takes? can puts So into context with

Dhivya Suryadevara

sure. Yes,

the relates wholesales will of to will of half kind type might the a of to year half normal relative in environment. a headwinds as it a have second been -- down couple of still year, have second adjusted So be you what last

depends So production, to and depending industry fully on lands where our recoup it ability the that. on

X% used better some opportunity be comes that, of is Secondly, higher X% a consumer the projecting prices there. range, at the GMF end could decline vehicle loss that GMF and to And extent in the number. there a to in

levels, production than is running out So talking have all that pre-COVID it even production to We of might out, that levels is not pre-COVID. though ability run some markets the international back all about. especially some Mary lower that in still at is quite and the are

normalize. would don't if production levels and the GMF, normal levels, be, at you back a and vehicle it's and downtime, to production credit losses I think safe that So have half prices say the huge second normal is

Operator

Sachs. of next Goldman the Your Mark line from question with Delaney comes

Mark Delaney

milestones to or may the to could investors margin you the EVs ship? be for to in intermediate shifts the mix maybe volume need the towards that Some the be neutral monitoring -- order will shift EVs milestones company are term. when battery terms to implications should EVs where and the of And So there costs talk your need may in about of company as margins? near gauge be any in to certain

Mary Barra

cell continue mentioned, to we're we and we continue. below, early I've and have then year to as in the rolling and HUMMER next that fairly Well, think to our and XXX system we plan get And out. start going rapid a cost platform out of life, with Ultium EV take off then to

the happen the that the it that a point think that life I get will on generation. program and So be through powertrain, of able depending we'll costs ICE parity see over to to

Mark Delaney

that coming around stronger my some talk think coming I about little follow-up X% helpful. the this with used of you than in more investors And That's question that, pricing used more mentioned. is down that? bit to Can a vehicle GM up Dhivya, observed X% had was recently. pricing how you

context some within quoted that number would pricing be to that thinking you're you So about how helpful. used just

Dhivya Suryadevara

Yes. That is a very point. good

we A looking Clearly, companies side. April. this just There's mark macro are We to we question supply reasons. as off-lease lease are inventories are there's seen the the And point. year. of the be in point about. always And that talked coming vehicle seeing year. increased half the increase, after from starting defleeting. to the low first in at of the few the There's seasonality are on a also new conservative strong second more we -- Rental is in the recovery have half extensions car backdrop

when continued a last appropriate to we about. upside months, in I in think all just talked vehicle we it's few strength seen what conservative. an that And clearly, used the if together, be So you the as that see put represents over you're going to have prices

Operator

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

Rod Lache

half. the not -- Dhivya, laid out that guidance, hoping a just for clarify points on the here but of can back was you scenario I couple you

$X of billion half. $X EBIT back billion said to You in the

GMF, think $X probably International, and Cruise billion it's I the negative. of around sum Corp, GM

Is some some billion it to structure America building. about North and So $X.X eliminates inventory I temporary of And with include from imply $X.X that, the that assume, the stuff. $X $X like saying? billion of billion what billion, cost that seems that would inventory would you're

a maybe billion, that XX at market. unit kind of -- million billion So Is $X.X interpretation? billion XX a $X.X reasonable

Dhivya Suryadevara

were billion of we way SAAR when that's said year, to at a globally. even flow. guided well. to But a if much look the you the puts would what this SAAR, cash it you're from if to perspective it's that's to might trying think million company potential and XX think this flow So to we to basis. expecting underlying scenario across trying be. $X what million about regional I XX which so a we takes half point a also simple free environment, difficult that at cash is quarter last that There's regions from -- to what of a cash Rod, second get had as is U.S. you're the on we And free at might get assuming we provided, the And a beginning of free I flow normalized break

points. allowances cash and important is takeaway think business I'm those trying gives demand they're whatever well. you say Austerity, flow can if strong, free environment on. giant key some to been bottom of standpoint. pre-COVID, we've of you on importantly, here up And cash about a to with, measures from to from of line. depending that sort dividends anything, a interpolate the boundaries level between The come And underlying communicate can So the like back you performing a talking Mary's going so generation really to step intact But see behind their we with is to for would obviously, to you now. cash conversion And you're the couple pre-COVID it. how taking sales associated we're going or and cash And and working take quarter-to-quarter the business continuing changed think product some and execute remains about of or about on launches the with production volatility GMF capital is point, what's so that's since years us assumption potential the And conversion a more are if to add those on and on. levels.

So numbers we are the a that from I standpoint. -- should I'd the provided into say that read is scenario how that's you business intact, and

Rod Lache

it's and pretty Yes, Okay. clear.

your to be biggest this Thailand I year. the But variance $XXX you've things year half and the we to are is driver it You the of like is the working sounds think million. billion inventory $X control, thinking should with that within about going next back billion about in macro How -- quantified, obviously, $X to some be build. -- capital from ex but explained Australia,

as you of the How South thinking suggested can we those America be should year? we items breakeven. that You look about out call on get some closer to to next

Dhivya Suryadevara

mentioned product earlier. downtime the macro key say, be aside, the I'd will Yes. tailwind that I

a going saw well have to the we've actions from perspective. track each an XXXX. of GMI going not with COVID last few continue You Adjacencies on have that. years, to That's in both seen, growing, aftersales as OnStar year into And we're already as as announced. to and going full been of is an the restructuring you've sales. that We're have the

on well South revenue as perspective. line been hands the put but both we've breakeven both inching deck it, a America the won't America, on from as towards Again, I all I South a side. as it's mentioned, with side cost the time

serve year. side into initiatives flow look And right would for will all say us standpoint, controllable all think those of So we cash I the stronghold all a the I as standpoint, we in of regions. are our next a of on from those XXXX, as from

Rod Lache

just maybe just Mary, now. was Okay. status the China Great. that you lastly, the -- right could business address, of And hoping just

a You the your we coming looked was still the What But seems from prepared mentioned here? like see as the in on at the what's market seems bit prospects in view remarks especially Cadillac quarter. your moment? you luxury, to that, market And at underperforming do be last that back.

Mary Barra

that continue but there a strong to them. few of an to mentioned have -- continues opportunity that new pressures, business. ongoing I think of pricing to I improve cadence we be do launches a see we Clearly,

the our addressed think inhibited the X-cylinder of the issue also I options We some last that end added at engine year. and progress of

disciplined important that on the obviously, four And region we add So then, very cost. very cylinders. stays the

look strength we I we I Buick, Cadillac. and that have we will with agree can in as So do progress of seen you the at more.

opportunity. So I see an

the we assuming the we'll but think, a type of get recovery planned medium of year, quarter, term, ability market roughly as you as in market unit to the for more opportunity the move at forward. to For our this profitability. portfolio maintain and for even opportunity XX million when go per look I that the we're growth you million there's and see that to kind NEVs, And kind of that and I said we of the further, on, $XXX trajectory even continue upside

Operator

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

Brian Johnson

Yes. of A questions. couple

update you in your $X of vehicle cost I fixed math North times think $XX,XXX XXXX, about you out used chart showed of of to $XX to you much of sort we a of America, the or variable how like reduction, of do sort billion per revenue, cost was XXXX was the your fixed I Can on of So bases subtracting contribution just new the If if so and the the a put period, base. things billion. things? price redesigning cost billion America? from of $XX us get fixed forth? ballpark of of for supplier Two, in in materials how bill A, is North cost X that cost is concessions and couple much

Dhivya Suryadevara

came with up Brian, I'd than that. we've side. part is of transformational the it's higher taken on actions it probably with savings. the And say say, cost number you that the is I'd lower Yes.

number If reduce you your we been -- I you from think savings think of lot alluding consistently a were the is austerity cost to second of by the -- system cost out about can XXXX lower it to at the least a you're that taking the get so on frame not to, have time fixed fixed cost question, XXXX, actions the And the higher number. the transformational side.

lower. So goes I'll spend as lower typically give expenses, fall salary sundry that this as That you lot was a typically and cost well fixed that the few examples. costs. into A items well. deferrals Marketing pay-related about, of typically you're costs was fixed into talking of travel as bucket fixed

less these out extracting of the system more concessions I Hopefully, more kinds about it's So actions that's about austerity about. variable of talked and that helpful.

Brian Johnson

'XX, And somewhat back? as how world, in kind we fixed things come much into the of costs go assuming those of normalize

Dhivya Suryadevara

and those are continue we permanent, that assume savings move cost transformational The towards billion to say. to $X will I'd challenge, $X.X the That's the billion.

color and the at it's standpoint, anything, going number that's high the the that's fixed as So when that do a soon. perspective, pay it's from so whether to -- to we're a on it hourly come we'll cost that able time, really, just cost, more stick, will be give a restoring of too salaried talk it what and And austerity the to make end if back. the range. be of can environment. XXXX we guidance more clearly, activity, And But obviously, on, to rest from we about or regular see

Brian Johnson

there on opposed where the were GM good as forbearance us Financial Okay. the fall? delinquencies forbearance question. you GM and update into delinquencies throughout but just finance Over And final then Can move Financial, closes agreements risk with industry, further customers. we to as consumer in shape, on -- are to into

Dhivya Suryadevara

were been frame. on We've seen the It's the earlier the in trend second actually, of starting quarter slight -- back pickup towards time very And Yes. in the a the numbers half again. down track. to quarter, in actually April much

of these are at deferrals. late being the numbers the And we've closely. about conservative across So were these metrics watching July. normal fees seen decreasing board, and that, all looked payment returning we obviously, from to We've the closer peak levels and April been all we're And we've in saw the it. by all

Operator

of line Crédit Dan Suisse. comes question Your from next Levy the with

Dan Levy

XXX,XXX a year-end. year-end? just period, I a And wanted target I target SAAR. I around a rebuild know I the on ask typical over a XXXX, to to levels. month-end first, the a at inventory units. we're XXXX what's know you're inventory typically So not XXX,XXX does that of beyond saying look production XX was question like by fair if But in But reflect se. million XXX,XXX and constraints inventory assume assume isn't per time your

Dhivya Suryadevara

Yes.

closer your based that to XXX,XXX, point, environment So light on to. alluded is million I SAAR of XX to vehicle second a half

based we the you extent to of taking will as production much again. be range, levels we think since as we or And what say, to see the from that just I to calibrate are back all we're in will to And the XXX,XXX measures to Clearly, truck capabilities a by to to. So get production number increase look to we would we alluded that levels running industry go an on level, that trending will industry you the well out. back can level we it add this already trucks the standpoint, is demand are up stronger, appropriate And that we limited will I all see. the if start possible. as calibrate on

Dan Levy

million. Great. know today breakeven America talked -- the XX about as reaffirmed of EBIT you to just million Okay. a North I And and SAAR you've XX follow-up,

down XX% company SAAR total better million. America than You XX million, lot just did with down XX%. million North XX is X your breakeven volume a to

XX -- to below XX a the your in you've is there given resiliency EV development it missing? highlighted? million? to XX of why coming What's than margin online? breakeven mix, Is that million are is we're XX% about So potential there? missing isn't SAAR something million expenses a what better environment Or see the there just And we

Dhivya Suryadevara

Yes.

SAAR, take almost a million were those were of down is much That you better just the to demand so X this So million question, if And ground basically quarter's million results continuing, look and normal able you we pull. is wholesale lower, and standstill. given to XX production SAAR would inside a more XX%. units that imply it ask to how wholesales of extreme, everything much is XX to units. if reason the of actions about you call will a, but take is a will, very than And austerity it's downturn significant, yourself you our can be levers it, if the able at

difficult I ongoing. pull think would -- them think of production to actually we be some when is

up a held downturn And that up to me at level hold nature well So normal quarter. the the to be going during the very Inventories you're low. well in not. would this pricing as the dependent environment. both saw what the pricing you tell did or as were you see have pricing secondly, this -- And austerity will downturn. levels to what new if assumptions of on make carryover And vehicle pricing

doing we not that, can. is work we do through using continue million. we're we're much million breakeven a will to not XX different What a much So this Having as to circumstance going And down unusual we to to down. to as possible. breakeven point push look, as revise We're are at particular settling XX drive the to said level formal to comfortably level. as that going that

Dan Levy

squeeze obviously of your of Can Okay. lot I competitors. of the product in about talk seeing If on side. in off-road? just just product more actions presence some excitement a your one could the you given We're

Would ATX? your priority off-road with is much the expand a to ATX Chevy how brand? And what you? of beyond are GMC plans for So you

Mary Barra

to at true we each as then a Chevrolet. to off-road well capability I well. are build in when think our on you'll look see HUMMER, continuing as look brand offerings I as GMC and And you think there

very it's think It's we expand our important continue important. offerings. and to we'll So customers to

Operator

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

Christopher McNally

for Fantastic the results, framework. guys, thanks half second and

one numbers. quick, and the one So strategic real on

design. spirit EV questions, I other XXX,XXX XX think may leaps models, believe those And many big So we industry this have you particularly upcoming trouble not plus. which even some be the vehicles, sort sort incremental in in of of -- and could of of one of only have but progress the in participants that to really be pointing

would a of question, chance my just is So which you mind a new EV -- of think versus, EV? approach sharing you more wide chance of to let's what high-unit is portfolio GM's or a say, the best product, program

Mary Barra

platform cover Day technology, vehicles. back BEV, segments. BET, to the and platforms at portfolio kind that we Well, say, truck three us in to I'll have have BEV -- expressive that then are do have I think the plus then you allow huge and those coming the new high-volume electric of we and our portfolio you between we've a full our -- which, if sharing forward. what plan Ultium offerings; the foundational have that look There's at for our mainstream We step do March our is with shared we battery and cell EV

excitement a Cadillac And up when you'll think the start you participating to expects it we design customer the be significant see the very you'll truck and bring. technology and into that planned, in truly to tapping it -- wants, and the then plan back see will that think I we on with I have way. see Lyriq portfolio what

Christopher McNally

one approach say no But the terms portfolio a vehicle charge going of to of lead number that to of is more Mary, is that units? it in it's high fair really a

Mary Barra

don't I correct. think No, that's

I key we think sweet are are in segments that more. fair we spot large that plus get entries have intend and share our that some to the of segments,

mainstream. won't it will be on fringes. the It be So

Christopher McNally

QX despite half numbers. the SUV have year? year, as in the this turn Okay. Great. fair to should it tough QX, the just quick comp that well then real turn you new assume as obviously, mix and component launch Is on of volumes we And second mix one positive one see the in HD have launch again positive half? second but you the even can last So

Dhivya Suryadevara

Yes.

High are mix. And high. that's favorable and trending are these mix. whether we're truck strong ramp other 'XX or Country labor talking to Obviously, typically, more trim is think drive SUV going I profitable -- to going mentioned, mix wasn't a and about full-size terms and from for And tend Denali And mix the seeing, vehicles, it mix back full-size a disruption those unadjusted be I tailwind a volume, ATX, or LTZ of from I production, to favorability as see standpoint. not. very and mix you're to and adjusted those SUV aspect is when up And components. sure few there's well But the as we're numbers generally in a standpoint.

mix full-size as generally quarters. vehicle more as trucks by both full-size favorable to specifically mix trim well So we mix be as the as next forward as few SUVs in driven should well go

Operator

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

Mary Barra

frankly, the everybody, perspective company. industry today. joining you critical know Again, world, We for virus. that thanks, General Motors, and at recognize at an our for we're look We a the from as point

future We are committed very and provide to to future. leading through the current a the into strong challenges

the determined are way a the to business vehicles. in outstanding creates run that and with shareholders We value deserve our

EV eagerly crashes, perspective are we EV on are and but And creating vision a zero with that strong. bring an and I we For very, of which us technology from more technology world and achieve on understand zero we much not coming as to We help growth, awaiting and EV those that share see and was on you need will. to we know Cruise, and market. will customer-centered our deliver self-driving also our very our an are believe congestion. the I only the emissions like broadly, our to is of who and plan. to you innovations ultimately continue Super profitable very many very focused zero focused design growth, And we an of important had work attended hope AV comments having Day, step vehicles more

a week more truly the at we XX:XX that world's media we complete but we believe launch GMC first have super to is and reveal, the our upcoming and in truck. information, not It's websites a.m. spotlighting video it's to the today, posting So addition are EV. next Lyriq, the a HUMMER IR on it

for you'll take time hope thank take we look. your a So you time. again to some And

Operator

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

General Motors (GM) 29 Jul 202020 Q2 Earnings call transcript