With US vehicle prices averaging near $50K, General Motors sees 2nd-quarter profits rise 15%

DETROIT– U.S. customers who bought a new General Motors car last quarter paid an average of just under $49,900. That price helped the company’s net income rise 15 percent above a year ago.

And GM Chief Financial Officer Paul Jacobson said he doesn’t expect his company to cut prices much, despite industry analysts’ predictions that new-car inventories in the U.S. will increase and that discounts will be steeper.

The Detroit automaker said Tuesday it earned $2.92 billion in April through June, with revenue of $47.97 billion that topped analysts’ expectations. Excluding one-time items, the company earned $3.06 a share, 35 cents above Wall Street estimates, according to data provider FactSet.

While the average selling price was slightly lower than a year ago, GM sold 903,000 vehicles to dealers in North America in the quarter, 70,000 more than the same period in 2023. However, sales at the international division fell 7,000 to 140,000, the company said.

Earlier this year, GM predicted prices would fall 2% to 2.5% this year, but so far that hasn’t happened, Jacobson said. Instead, the company now expects a 1% to 1.5% decline in the second half.

GM’s prices have fallen slightly, Jacobson said, because a greater share of sales have come from lower-priced vehicles such as the Chevrolet Trax small SUV, which starts at $21,495 including shipping. The company, he said, has seen strong sales of higher-priced pickup trucks and larger SUVs.

According to Edmunds.com, U.S. buyers across the sector paid an average of $47,616 per vehicle in June, down 0.7 percent from a year ago. Per-vehicle discounts more than doubled from a year ago to $1,819.

The new car inventory in the U.S. has grown to just under 3 million vehicles, compared with about 1.8 million a year ago.

While other companies have increased their discounts, GM has been relatively consistent in gaining market share in the U.S., Jacobson said.

“So far, what we’ve seen in July is very similar to what we saw in June,” Jacobson said. The company “is making sure we’re putting out products that our customers love, and the pricing is taking care of itself,” he said.

Sales and pricing were among the reasons GM cut its full-year net profit forecast only slightly, from a range of $10.1 billion to $11.5 billion to a new range of $10 billion to $11.4 billion.

GM also said it expects to produce and sell 200,000 to 250,000 electric vehicles this year. However, it sold only 22,000 in the first half in the U.S., its largest market.

Jacobson acknowledged the company still has some work to do to meet its full-year targets, but said the new Chevrolet Equinox small SUV is just starting to hit showrooms and that production of other models is ramping up as battery plants in Tennessee and Ohio ramp up production.

The company, he said, will add $400 million to its first-half marketing spending from July through December, in part to build awareness of its EVs. However, annual marketing spending will still be lower than in 2023, he said.

GM spent $500 million on its troubled business in the second quarter Cruise autonomous vehicle unit$100 million less than a year ago. The company said it would indefinitely delay construction of the Origin, a six-passenger robotaxi planned for Cruise.

The autonomous vehicle unit will rely on the next-generation Chevrolet Bolt electric vehicle when it wants to once again transport passengers without human safety drivers.

Cruise lost its license to transport autonomous passengers in California last year after one of its robotaxis dragged a pedestrian crossing the road — who had just been hit by a human-driven vehicle — across a dark San Francisco street and came to a stop.

GM had hoped Cruise would generate $1 billion in annual revenue by 2025, but has been scaled back huge investments in the service.