Detroit, Michigan – A quick primer on how to make a whole lot of cash – increase revenues but keep expenses low. At General Motors, that strategy led to a record $2.9 billion in Q2 earnings, more than doubling pretty good results from 2015’s Q2.
“Our results were generated by strong retail sales in the U.S., record sales in China, and a continued emphasis on improving the performance of our operations worldwide,” GM Chairman and CEO Mary Barra says. “We’ll continue to focus on driving profitable growth and leveraging our technical expertise to lead in the future of personal mobility.”
The company’s more than $42 billion in Q2 revenues were up 11% while expensive were up less than 7%. That mismatched growth between revenue and cost growth resulted in a 164% increase in profits with almost all of that coming from North America.
The solid results show that Barra’s strategy – cutting low-profit sales to rental fleets and focusing on higher-paying retail customers – is working. So the profit spike came as GM’s share of the U.S. market fell slightly. Its share of the retail market was up.
It helps that the automaker has several new vehicles on the market such as the Cadillac XT5 crossover and Chevrolet Malibu. Helping even more are low gas prices which drive up the popularity of profit-rich trucks and SUVs.
Worldwide, GM’s vehicle shipments were flat, but revenues were up as customers spend more per vehicle (again because expensive large vehicles were outselling inexpensive small cars).
Source: General Motors