Detroit — General Motors Co. wants to restart most of its North American plants May 18 after its net income dropped 86.7% to $294 million in the first quarter of 2020 because of the coronavirus pandemic, the automaker said Wednesday.
Revenue totaled $32.7 billion in the first quarter, down 6.2% from the first quarter of 2019. GM’s profit margin dipped 2.8 points year-over-year to 3.8%.
“The strength of this company has always been its people, and I am proud to stand with our best as we confront these challenges together — as one team — while we continue our transformation,” CEO Mary Barra said in a statement. “We have a track record of making swift, strategic and tough decisions to ensure our long-term viability and create value for all of our stakeholders,” .
The drop in earnings comes just five months after the Detroit automaker lost $3.6 billion in the fall of 2019 from a six week, 40-day work stoppage by the United Auto Workers that caused GM’s income to fall 17.4% in 2019 to $6.7 billion. Most of GM’s North American plants have been down since the end of March after the automaker announced March 18 — seven weeks ago — it would start to systemically stop production.
GM’s North America profit in the first quarter of $2.2 billion actually exceeded last year’s $1.9 billion because of strong truck and SUV sales and cost actions. The earnings were offset partially by lower volume from suspending production. GM’s U.S. sales dropped 8% year over year to 611,422 vehicles, the lowest first-quarter volume level in at least the past five years, according to Cox Automotive.
GM’s trucks sales were a bright spot. Chevrolet Silverado sales jumped 26% to their highest level in at least the last five quarters, according to Cox. The hefty sales enabled Silverado to regain second place in the truck war with Fiat Chrysler Automobiles NV’s Ram. GMC Sierra sales were up 31%.
GM International reported a loss of $551 million in the first quarter as a result of the virus’ closing plants across the globe. GM lost $167 million in the quarter. GM shut down plants in China and South America for weeks in the first quarter because of the pandemic. South Korean production was also down for a short period. China and South Korean production has since restarted while South American plants remain closed.
Fiat Chrysler, which is also looking to restart most plants May 18, on Tuesday reported a net loss of $1.84 billion in the first three months of the year. The COVID-19 pandemic temporarily shut down all of the Italian American automaker’s plants from China to South America, contributing to a 16% year-over-year decrease in revenue to $22.3 billion.
Ford Motor Co. on April 28 reported a $2 billion net loss in the first quarter because of the pandemic. Ford’s revenue was $34 billion down from $40 billion last year.
The Dearborn automaker, which also closed plants starting March 18, expects to post a pretax loss of $500 billion in the second quarter. Ford hasn’t said when it will look to reopen plants, but The Detroit News previously reported all three automakers were working toward a May 18 restart date following the May 15 end of Michigan’s stay-at-home order that doesn’t explicitly allow auto manufacturing.
GM ended the quarter with a strong $33.4 billion in automotive liquidity: “We are focused on preserving liquidity and taking the right actions today to make the company stronger and more competitive in the long term as we navigate through these unprecedented times,” GM Chief Financial Officer Dhivya Suryadevara said.
To conserve cash, GM, which suspended its guidance for the year, halted its quarterly cash dividend on its common stock and stopped its share buyback program. GM in March drew down $16 billion from its revolving credit facilities to increase its cash position and maintain financial flexibility during the current uncertainty.
GM also extended its three-year revolving credit agreement for $3.6 billion to April 2022 to further strengthen its liquidity. GM and GM Financial previously extended a $2 billion 364-day revolving credit agreement to April 2021.
GM has cut its salaried workforce’s pay by 20% with the promise of paying it back with interest. The automaker has 69,000 salaried employees globally and about 40,000 in the United States.
Instead of laying off salaried manufacturing and engineering employees, GM has said 6,500 will participate in the company’s salaried downtime paid absence program and will receive 75% of their pay with benefits.
Executives will have 20% of their salary deferred and a 5% reduction in their cash compensation. Most senior executives will take a 10% reduction. GM’s directors also will take a 20% cut in their board compensation.
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