GM blunts impact of production cuts with SUVs

Bloomberg

General Motors Co. mitigated the effects of significant production cuts it warned were coming by boosting sales of SUVs now and selling Wall Street on the technological transformation it’s making for the future.
The automaker led by Chief Executive Officer Mary Barra reported adjusted profit of $1.32 a share for the quarter ended last month, beating the $1.11 average adjusted profit analysts had estimated. Results topped expectations despite the company cutting North American vehicle output by more than a quarter.
GM has taken a page from the book of Tesla Inc.’s Elon Musk this fall, generating buzz as investors bet that unproven businesses and technologies will reveal a new source
of profits. The Detroit automaker’s shares are up 30 percent this year, double the benchmark Standard & Poor’s 500 Index, as Wall Street wagers that GM’s test fleet of self-driving electric cars can be converted into a lucrative robotaxi operation worth billions.
“GM arguably has the most positive sentiment of any name in our space at the moment,” Barclays analyst Brian Johnson wrote. “Investors are looking for reasons to own GM.”
GM shares climbed 2.5 percent to $46.30 as of 7:35 am in New York.
While Wall Street has been excited about GM’s future technology, the past quarter was one of retrenchment. Production cuts were the biggest factor in revenue falling about 14 percent to $33.6 billion.
The automaker has been reducing output at passenger car plants as sales slow, including cutting a shift at its compact car plant in Lordstown, Ohio, and one at its sedan plant in Detroit. Even a sport utility vehicle plant in Tennessee will be cutting jobs next month to reduce inventory at dealers. GM also lost production during the quarter at an SUV plant in Ontario, where workers building the hot-selling Chevrolet Equinox went on a month-long strike that ended last week.