General Motors has posted a $758 million loss for the second quarter due to the impacts of the coronavirus pandemic.
In its earnings call, the car manufacturer said that it lost $101 million in North America in Q2 2020, despite posting a gain of $3 billion in the second quarter of last year. However, GM said that cost-cutting measures and strong pricing almost allowed it to break even, despite plants being closed for eight weeks.
Globally, revenue at GM fell 53 per cent to $16.8 billion while its adjusted loss before interest and taxes was $536 million, compared with $3 billion a year earlier. GM also burned through $8 billion in operating cash this quarter but says it still has liquidity of $30.6 billion after it borrowed $16 billion back in March, Auto News reports.
“GM deserves credit for pivoting quickly and rolling out blockbuster incentive programs that arguably kept the industry afloat through its most challenging period in more than a decade,” said Edmunds’ executive director of insights, Jessica Caldwell. “With the worst quarter now behind GM, the company — like all automakers — is challenged to sell in a world filled with uncertainty for consumers, employees and operations.”
GM’s light-vehicle sales dropped 34 per cent in the U.S. last quarter while its North American plant capacity utilization rate also dropped to 36 per cent, down from 104 per cent in Q2 2019.
GM CFO Dhivya Suryadevara added that GM expects $7-9 billion in cash generation for the second half of 2020 which would allow it to repay additional debt from the pandemic and offset the cash burn from Q1 and Q2.
“We’re watching the virus, the economy and its impact on the overall industry very closely,” she said. “But the takeaway for this quarter is our ability to flex our cost structure quickly and to preserve liquidity and demonstrate the performance that we’ve been working towards over the past few years. And we will continue to do that and continue to be laser-focused across all areas of the business.”