General Motors (GM) has been able to maintain profitability in the wake of several recent shake-up causing concerns within the automotive industry.
The automotive industry has faced several challenges this year with the projection of an upcoming slowdown in sales, tariffs that are looming, and higher costs for materials. Even so, GM has been able to post profits for the third quarter that were much higher than expected and the end of the year earnings are expected to come in at the higher end of its forecast. These results are thanks to the strong demand in the North American market that’s driven by the new pickup trucks that are being offered by GM under the Chevrolet and GMC brands.
Increases Make a Difference at GM
It’s no secret that larger vehicles bring in higher margins and more profits to any automaker. The sales for the Chevrolet Tahoe, Suburban, Equinox, and GMC Yukon models rose nearly 12 percent compared to the previous year. Add to this the fact that GM is increasing the production of the Chevrolet Silverado 1500 and GMC Sierra 1500 which will also have previous generation models built for the next several months in order to meet the demands of the market and spurn even stronger increases in profits for the company as a whole.
Challenges Faced and Lowered Expectations
In July, GM lowered the full-year forecast when they calculated the higher steel and aluminum costs with the tariffs that are being imposed by Donald Trump’s administration. Another challenging area of concern is the Chinese market. GM has been strong in the market for many years but the massive tariffs on foreign models that are being imposed in the country could affect profits across the automotive industry. China could also see its first year of ending with a negative sales reporting in decades. This is the largest market in the world and one that all automakers are paying close attention to.
Balancing Out the Challenges
With GM showing the ability to continue to meet the demands of a global market and the income from China showing an increase for the company, the GM brands have been able to remain strong and offer impressive profits for the company. Recent increases in interest rates in China have also contributed to a sales success in the region. Last year, GM reported a loss in the third quarter and this year the net income of $2.53 billion shows a strong swing to the positive for the company, which is expected to be even stronger in the fourth quarter.
Sales Help the Creative Process
Because GM has been able to show strong sales and profits this year, we can expect the brand to find the areas of success and expand on them. With the plan to have previous and new models of the pickup trucks offered for almost the entire year of 2019, when the large SUVs are redesigned, you can expect a similar path to success by the brand. We’ll have to see if GM finds a way to offer us new and more interesting vehicles, but the largest automotive company in the world is ready to continue to grow and succeed.
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