Despite bearing a large portion of the cost of an expensive electric vehicle recall, General Motors reported $2.54 billion in second-quarter net income, a 52% increase over the previous year. The quarter was better than predicted due to continued solid vehicle sales and pricing, as well as cost reduction. The Detroit carmaker boosted its full-year financial projection on Tuesday but with one caveat: it must be able to negotiate union labour contracts without a strike. Customers spent nearly $1,600 more per vehicle last quarter than from January to March, according to Chief Financial Officer Paul Jacobson, with an average U.S. sale price of $52,000. Discounts and inventories were steady as the company sold 19% more automobiles in the United States, its most profitable market, than a year before.
“We’ve had the ability, willingness, and capability to remain disciplined in our pricing and incentives,” added Jacobson. “So, while many of our competitors are moving their prices around a lot, ours have been very consistent,” he said, citing robust consumer demand. For the second quarter in a row, GM boosted its full-year projection, predicting net profits of $9.3 billion to $10.7 billion. It had previously forecast $8.4 billion to $9.9 billion. Another $1 billion in cost reductions discovered by GM, according to Jacobson, pushed up the guidance, on top of the $2 billion announced before for the full year. The savings came from fewer paid staff expenses as a result of 5,000 workers taking buyouts, as well as marketing savings and administrative cost and car production complexity reductions.
