General Motors reported solid fourth-quarter and year-end results Wednesday despite an eight-week production shutdown caused by the COVID-19 pandemic and the impact of the Takata airbag-inflator recall announced in November.
GM’s total market share rose to 18.32% compared with 17.09% in the year-earlier quarter, said Cox Automotive. It is the largest year-over-year gain in total U.S. market share since 1990.
As a result, about 44,000 U.S. hourly workers at General Motors will receive a profit-sharing check of $9,000, said GM spokesman Jim Cain. The before-taxes payout for its UAW-represented workforce is an increase from $8,000 in 2019, but down from the $10,750 paid to workers in 2018.
More:GM to pay UAW workers $8,000 in profit sharing
More:Ford UAW hourly workers earn $3,625 profit-sharing checks amid 2020 earnings dip
For the full year, GM’s pretax profits were $9.7 billion, up from $8.4 billion a year earlier driven in part by the fact that GM’s third- and fourth-quarter earnings in 2019 were hit hard by a 40-day strike by the UAW.
Additionally, GM gained traction last year with its redesigned full-size SUVs and big demand for pickups, both of which deliver fat profits.
In a letter to shareholders Wednesday, GM CEO Mary Barra said GM’s brands were well prepared when plant production restarted and consumer demand recovered faster than expected — “Chevrolet and GMC with their outstanding full-size and midsize pickups; and all four brands with a mix of new small- and full-size SUVs, which we launched on time despite the pandemic.”
“These products helped drive our largest year-over-year gain in total U.S. market share since 1990. Just as important, their profits are helping us create a new chapter for GM that is electric, connected, sustainable, inclusive and growth-oriented.”
In the fourth quarter, GM’s pretax profits surged to $3.72 billion from $105 million in the year-ago period.
The UAW issued a statement commending GM on the results.
“Despite a year of a pandemic and loss of production in 2020, General Motors reported a solid profit for North America,” said Terry Dittes, UAW vice president of the General Motors Department. “This is a testament to our UAW-GM Membership, who produce some of the finest and most sought-after vehicles in the world, right here in the U.S.A.”
GM’s results beat Wall Street’s expectations in the fourth quarter, said Michelle Krebs, executive analyst for Cox Automotive.
“It should not have been a surprise. GM outperformed the overall market in the fourth quarter, with sales up 5% to the industry’s 2% rise,” Krebs said. “Further, GM sold more of the right products in the quarter — pickup trucks and SUVs, especially its new large ones, that generate the biggest profits for the automaker. GM’s biggest challenge is inventory. Its supply of those profitable models is tight.”
Looking ahead, GM said it’s well-positioned in 2021. The industrywide semiconductor chip shortage will not affect electric vehicle development.
To mitigate the chip shortage impact, GM said it will prioritize production of full-size trucks, SUVs and EVs. For 2021, GM expects to report $10 billion to $11 billion in pretax profits, which includes a hit of $1.5 billion to $2 billion due to the chip shortage.
Profit sharing
GM’s North American pretax profit for 2020 was $9.1 billion, up from $8.2 billion in 2019, it said in its earnings release.
The GM-negotiated formula with the UAW for profit-sharing checks is $1,000 per every $1 billion in annual earnings before interest and taxes.
Ford’s 56,000 union represented factory workers in the U.S. will receive $3,625 profit-sharing checks, down from $6,600 paid a year ago as reflected by Ford’s profits in 2019. Ford reported its 2020 earnings last Thursday. Its earnings before interest or taxes — EBIT — of $2.8 billion, down from $6.4 billion in 2019. Ford’s North America’s pretax profit was $3.6 billion — down from $6.6 billion in 2019, $7.6 billion in 2018 and $8.1 billion in 2017.
Last year, about 44,000 Fiat Chrysler workers averaged $7,280, up from $6,000 for 2018. Fiat Chrysler, now called Stellantis, will release 2020 earnings later this month.
Contact Jamie L. LaReau at 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.