General Motors reported better-than-expected earnings an sales early Tuesday amid robust truck sales and record EV sales. But shares tumbled amid concerns about its money-losing China operations.
Ford Motor, which reports Wednesday night, fell below a buy point.
Expectations rise for a Fed rate cut later this year are bolstering automakers. Lower rates on car loans would make repayments easier for consumers, propping demand.
General Motors Earnings
Estimates: Analysts on average expected GM earnings to jump 41% to $2.71 a share, according to FactSet. They saw revenue growing about 1% year over year to $45.1 billion.
Results: General Motors earnings raced 60% higher to $3.06 a share, a big acceleration from Q1's 19%. Revenue rose 7% to $47.97 billion, dipping from Q1's 8%.
Outlook: GM now sees full-year adjusted EPS of $9.50-$10 and adjusted EBITA of $13 billion-$15 billion, up from $9-$10 and $12.5 billion-$14.5 billion, respectively. Analysts had forecast 2024 EPS of $9.45.
GM Aims To Restructure China Ops
General Motors continued to lose money in China, suffering suffered a $104 million loss in equity volume via its joint venture with state-owned SAIC.
CEO Mary Barra, speaking on GM's conference call, said the rest of the year could be "challenged" in China. The automaker has taken a number of "significant" steps to cut inventory, production and fixed costs, but "they are clearly not enough."
GM's China sales are in freefall amid pressure from local competitors, notably EV giant BYD.
GM Pauses Cruise Origin Effort
General Motors will halt indefinitely production of a Cruise Origin autonomous vehicle. It took a $600 million charge in the second quarter.
GM Stock Plunges
Shares of General Motors tumbled 6.4% to 46.38 in Tuesday's stock market action after initially climbing 4% before the open. GM stock rose 2.6% on Monday.
GM stock tested a 46.16 flat-base buy point, first cleared on June 10. It's below a 49.35 entry from a short consolidation.
GM stock was up 38% for the year so far as of July 22.
Ford stock lost 2.05% to 13.83 Tuesday, just below a 13.95 cup-with-handle buy point. Shares broke out on July 12, then hit a 52-week high of 14.85 intraday Thursday before pulling back Friday.
Ford is set to report Q2 earnings Wednesday after the market close.
Tesla gave up 2% Tuesday with earnings due after the close. Shares jumped 5.15% on Monday.
Auto Sales, EV Sales, Share Buybacks
Despite a crippling cyberattack, General Motors, Ford Motor and the broader U.S. auto industry grew auto sales modestly in the second quarter.
Analysts blamed high interest rates, steep vehicle prices and economic uncertainty for the muted growth.
Despite those headwinds, GM delivered an impressive 696,086 vehicles in Q2, led by pickup trucks. The automaker claimed its best auto sales quarter since Q4 2020, as well as its best EV sales quarter ever.
GM's EV deliveries jumped by 40% to almost 22,000. The surge highlighted GM's growing momentum in the electric vehicle market after challenges, while Tesla tries to return to growth.
General Motors continues to push out new electric vehicles, but challenges remain.
On Monday, GM CEO Barra cast doubt on her company's ability to achieve targeted production capacity for 1 million electric vehicles by 2025. On Thursday, Ford said it would expand production of its F-150 Super Duty trucks to a Canadian factory that was meant to produce electric cars.
Shareholder-friendly policies continue to boost GM stock in a difficult market. The company unveiled a new $6 billion share repurchase program on June 11, citing profitable gas trucks and EV improvement.
GM stock offers a 12-cent quarterly dividend per share, yielding 0.8%.
