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General Motors looks to trucks and SUVs to rev up margins

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General Motors said on Tuesday that a richer mix of full-size pickups and mid-size SUVs in North America should help it offset higher commodity costs in 2018 and maintain pretax margins above 10 per cent.

The automaker posted better-than-expected quarterly results as cost cutting and higher vehicle prices offset a double-digit decline in US sales volume, and it predicted 2018 would be a strong year globally and in North America.

GM shares rose 3.8 per cent to $41.03 in late morning trade.

Chief executive Mary Barra told analysts that GM expects its financial performance to “accelerate further in 2019”, when the company launches redesigned heavy-duty pickups and full-size SUVs in North America, as well as a new family of low-priced compacts in emerging markets.

Chief financial officer Chuck Stevens said GM’s capital spending will remain at about $8.5 billion through 2019, then should start to ease. He said GM expects to generate free cash flow of $5 billion in 2018, with as much as $2.8 billion available for additional share repurchases.

Stevens said despite recent stock market volatility over concerns the US economy may be overheating, the country’s number one automaker is “not overly concerned about inflation”.

“Our forecast is premised on continued growth in the US economy,” Stevens said. He said GM expects the Federal Reserve to raise interest rates by 75 basis points in 2018.

– Reuters

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