Ford CEO change, GM electric vehicle investment in focus ahead of Q3 earnings reports
Ford (F) is scheduled to report quarterly results after the market closes on October 28, while General Motors (GM) is scheduled to report before the market opens on November 5. What to watch for:
FORD EXPECTATIONS: After reporting Q2 earnings, Ford provided Q3 adjusted EBIT guidance of $0.5B-$1.5B. Stone noted that the guidance reflected the economic effects of the COVID-19 pandemic, weaker global demand for new vehicles, parts, services and a lower profit from Ford Credit.
FORD Q3 SALES: On October 2, Ford reported Q3 total vehicle sales of 551,796, down 4% year-over-year. Q3 truck sales were 311,751, up 0.6%. Q3 SUV sales were 191,803, down 0.7%. Q3 car sales were 48,424, down 37.5%.
The company said, "Industry recovered at a stronger than expected pace, as the country continued to reopen. Ford's Q3 sales were up 27.2 percent relative to Q2 sales. While down 4.9 percent compared to a year ago, Ford significantly outperformed an industry decline of 10 percent. With the help of stronger retail sales and rapidly recovering commercial sales, Ford retail share of the industry grew by an estimated 0.2 percentage points, while Ford's Q3 total share expanded by 0.8 percentage points. Excluding discontinued cars, Ford retail sales were up 1.3 percent."
FORD CEO CHANGE: Ford has experienced a CEO change since last quarter after the retirement of Jim Hackett following three years as chief executive. Q3 will mark successor Jim Farley's first quarterly earnings report with the company. When Farley took over he said Ford plans to move with urgency to turn around its automotive operations - improving quality, reducing costs and accelerating the restructuring of underperforming businesses.
One of Farley's first big changes was to Ford's operating model which included concentrating decision-making and accountability around product and customer groups in three regional business units - The Americas and International Markets, Europe and China; accelerating innovation in an effort to be a leader in new businesses such as autonomous vehicles and mobility; harnessing expertise in industrial platforms to develop connected vehicles; unleashing technology and software in ways that set Ford apart from competitors.
GM EXPECTATIONS: While GM did not provide detailed guidance last quarter, the company said it expected Q3 to be stronger than Q4 due to holidays. Morgan Stanley analyst Adam Jonas told investors in a research note that GM results on November 5 are likely to be "very strong" based on production trends, reported sales data and early results from dealers and rivals; anticipation for the Hummer unveiling and a "morphing" of the narrative around GM "from a challenged legacy to a company taking bold steps."
GM SALES: On October 1, General Motors reported Q3 deliveries of 665,192 vehicles, which was down 10% year-over-year. The company said that sales improved sequentially each month within the quarter, a sign of a recovering industry. Industry and GM sales rebounded in September, finishing the month with year-over-year sales increases. Total industry SAAR was an estimated 15.9M vehicles for the quarter, up about 4M units from the previous quarter.
"Our dealers are doing exceptionally well utilizing a combination of customer-facing online technologies - such as Shop. Click. Drive. - and showroom sales to deliver vehicles safely to our customers. This is contributing to retail share gains while we continue to refill the pipeline," said Kurt McNeil, GM, VP, U.S. sales operations. "Industry-wide, dealers are selling a high mix of large pickups as the summer comes to an end. Our strong large pickup and all-new full-size SUV lineups from Chevrolet and GMC are selling extremely fast."
GM EV INVESTMENT: General Motors announced that its Spring Hill, Tennessee assembly plant will begin the transition to become the company's third vehicle manufacturing site to produce electric vehicles, joining Factory ZERO in Detroit and Hamtramck, Michigan, and Orion Assembly in Orion Township, Michigan. In addition, the company confirmed investments in five Michigan plants for future crossover and full-size pickup production. The six U.S. facility investments total more than $2B, bringing the total amount GM has invested or committed to invest in its U.S. manufacturing sites to more than $29B since 2009. The renovation work in Spring Hill has already begun. "We are committed to investing in the U.S., our employees and our communities," said GM Chairman and CEO Mary Barra. "These investments underscore the success of our vehicles today, and our vision of an all-electric future."