General Motors (GM) recently authorized a $6 billion stock repurchase program, spurred by the company’s strong revenue growth and strong profit margins. At Deutsche Bank’s Global Auto Industry Conference, Yahoo Finance automotive reporter Pras Subramanian is joined by GM CFO Paul Jacobson to look at the automaker’s vehicle prospects electric (EV).
Jacobson proudly notes that GM has seen remarkable growth in the electric vehicle sector, saying the company’s progress is “exceeding anyone else’s.” With new product offerings expected to hit the EV market, the CFO says, “We’re starting to perform really, really well. »
Regarding the company’s business dynamics going forward, Jacobson told Yahoo Finance: “We’ve always taken a very stable view in terms of what we’re trying to do with incentives, with inventory levels, and the team was very strong in this area. executing that, and the vehicles, the customers love them. »
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Video transcription
Turning to the auto industry, General Motors today approved a new $6 billion stock repurchase program, with the company’s CFO Paul Jacobson attributing the move to strong growth margins revenue and cash flow.
Join us live from Deutsche Bank’s Global Automotive Industry Conference in New York.
We have the man himself, General Motors CFO Paul Jacobson, alongside Yahoo Finance pros Superman, and hey, pros, take it away.
Hey, thanks, Brad.
Yep, here with the man Paul Jacobson, GM’s CFO.
If you just announced Brad, you’re talking about this new $6 billion stock repurchase plan and that’s on top of the $10 billion you invested in SR at the end of last year.
So what kind of, what’s the story here between GM and now, there’s a lot of cash return shareholders.
Yeah.
Well, thanks for the time.
Uh Today we’re excited to be here at the conference and sharing the action the big news is that we continue to look at our capital allocation policy and the company has continued to operate and we’ve seen pricing stability, we’ve seen disciplined incentives from our team and we’ve seen a portfolio of vehicles that customers love and that all adds up to a lot of success.
So we can invest in the business.
We are able to maintain a strong balance sheet and return cash to shareholders.
So we have finalized this prior private repurchase authorization that we have granted and are pleased to announce that the board of directors has just authorized an additional $6 billion in share repurchases which will begin from the second half of 2024.
Yeah, and you also increased the dividend at the end of last year.
Um So, you know, a lot of big news from a capital return perspective.
I think the investors at this Deutsche Bank conference are happy to see that.
But some activities as well, what kind of evolution they have going on right now as we’re halfway through 2024.
Um, skyrocketing electric vehicle sales are still strong.
What’s going on with the mix there?
Exactly.
So, you know, we’ve seen, uh, we’ve actually seen EV growth moderate a little bit this year for the industry, but MZV growth is outpacing everyone else.
We recover a significant portion.
We sold more than 9,500 electric vehicles in North America last month.
Um, so I see some really strong gains in the blazer words, really excited about the game-changing Equinox, which will be the least expensive 300 mile vehicle, um, on the market in the EV space .
And it’s just starting to gain momentum as we look to the future.
So we’re starting to execute all the spaces really, really well and we’re seeing that ramp-up and the ice portfolio with the new Traverse, the new Equinox, those vehicles, not only are our customers really flocking to them, but they’re also more many. cost-effective than the older models they also replaced.
So the company is doing really well.
You know, you’re talking about cars, about tracks, about a cheap car that you can build affordably.
What about that?
Equinox?
Well, it’s going to be a mainstream electric vehicle that you’re trying to target, a profit metric at the end of this year.
Is this still relevant for EVS?
Yeah.
So what we said is that, you know, we expect to produce 200 to 300,000 evs this year and we can have a positive variable profit.
So that means we can sell it for more than the cost of the materials and start to offset all of our fixed costs.
We believe we can be in this position across our entire electric vehicle fleet by the end of this year and remain on track to become profitable on an E bit basis in 2025 and beyond. are there P-Haus and hybrids?
I know, you know, Corvette E Rays.
We were talking about it earlier.
It’s a great car, amazing performance.
But will we see this technology trickle down to entry-level cars?
When are we going to see these released?
So we talked about adding a plug-in hybrid or a P have from 2027.
Um, we see this as a very valuable tool to help us reduce compliance against electric vehicle adoption.
So for customers who aren’t yet comfortable with electric vehicles, a plug-in hybrid is a great option to get that extra range extension and still have the backup of an ice motor, uh, for those car trips, et cetera. .
So we think this can be a really good tool to help some of these skeptics get into EVs in the long term.
But when you look at our battery electric vehicle portfolio, it’s really compelling what we’re able to offer in terms of the range of styles and capabilities and the kind of capacity to kind of augment that with Phabs and hybrids all the way. .
Um, look at the company as a whole.
We are at the conference here.
You’ll soon be talking to some investors about it.
Um, what are the kinds of highlights that you want to note for 2024 and beyond and kind of like, you know, your Ebit adjusted to a bigger target like that.
Yeah.
So, you know, we came out at the beginning of the year and talked about $12 billion to $14 billion in EBIT.
And we were able to raise that guidance at the end of the first quarter based on our performance and the business continues to perform very, very consistently for us.
So we’ve always taken a very stable view of what we’re trying to do with the inventory level incentives.
And uh, the team has been really strong in executing this and the vehicles, the customers love them.
And that’s where it all begins.
If you don’t create the products that customers want, then the big business becomes much more difficult to manage.
But, uh, our design team, our engineering team has created a portfolio of vehicles that customers love.
Well, yes, customers, the United States, customers in particular, you know, we hear a lot that they’re doing well, they’re not doing well.
Prices are high.
What’s your 500 or 30,000 foot view of GM’s American customer, how are they doing, how are they doing, what are they telling you guys?
Um, our customers responded very well and they maintained that strength.
Um, you know, a lot of times when you look at full-size trucks, full-size SUVs, we still see people going premium levels.
Um and that this company has been solid.
Um, but you look at the resiliency of our portfolio down to the Chevrolet tracks that you mentioned.
I mean, it’s an incredible vehicle that starts at $20,000.
So, uh, I think one of the keys to GM’s success is this portfolio that has something for everyone in all the different price points that they might be looking for.