General Motors (GM) appears likely to be caught between populist forces in the U.S. and abroad this year, with the automaker stressing “very constructive” dialogue with the Trump administration but forecasting “relatively flat” 2017 results in Europe as it navigates the aftershock of Brexit.
But as automakers find themselves in the crosshairs of President Trump’s Twitter account — his platform for strong-arming the industry into being more U.S.-focused — GM tried to position itself as sufficiently weatherproofed for any tweet storms, tariffs or border adjustment taxes that might come from Trump’s strain of economic nationalism.
“Our analysis shows the U.S. auto industry, on average, derives in the mid-50-percent range of its content from non-U.S. sources. Ours is lower,” CFO Chuck Stevens said Tuesday on the company’s fourth-quarter earnings conference call. “If current proposals are enacted, we expect to be less affected than some others.”
The company’s fourth-quarter earnings per share fell 8% to $1.28, beating estimates for $1.17. Revenue rose 11% to $43.91 billion, topping views for $41.5 billion. The company also backed the strong full-year EPS outlook it gave last month — of $6.00-$6.50 a share, above estimates at the time for $6.01.
However, adjusted earnings before interest taxes fell in all segments except its finance division. And Wall Street, Bloomberg noted, on Tuesday appeared to be concerned about thinning margins and the prospects of some new crossovers, which like SUVs tend to be higher-margin vehicles. The company also said incentive spending could creep up this year.
Shares tumbled 4.7% to finish the regular trading session at 35.10 on the stock market today, puncturing support at their key 50-day line. Ford (F) slid 1.4% to 12.34, also undercutting its 50-day line. Fiat Chrysler (FCAU) lost 4.6% to 10.27, as French investigators referred the company for possible prosecution over its diesel emissions.
The slide came even as General Motors said it nonetheless expected a surge in global volumes.
“GM expects its global volume from new or refreshed vehicles to grow to 38% from 2017-2020, up from 26% in the 2011-2016 period,” the company said in its earnings release. “New or refreshed crossovers, trucks and SUVs are expected to represent a majority of this volume between 2017-2020.”
Due to the automaker’s 2016 performance, “52,000 eligible GM U.S. hourly employees will receive up to a maximum profit-sharing payout of $12,000.” GM also boosted its stock buyback program by $5 billion.
Trump has accused the auto industry of not building enough cars or creating enough jobs in U.S. The president has also called for a stiff border tax on U.S. companies that try to sell products in the U.S. but don’t make them here.
Stevens, during the call, said there was still “significant uncertainty” over what any new U.S. trade or tax policy might actually look like. But analysts contend that General Motors makes more vehicles in Mexico than Ford and is more exposed to China, two nations Trump argues have taken advantage of the U.S. on trade.
“We are supportive of efforts by President Trump and Congress to implement tax reform that improves the competitiveness of American companies,” Stevens said on the call. “GM continues to share job-creation ideas and industry information with lawmakers to help them create proposals that will be positive for the U.S. economy and keep vehicles affordable.”
CEO Mary Barra expressed optimism about the company’s conversations with the Trump administration — be it about trade, regulations, autonomous cars, and the nature of its operations, some of which require years of planning ahead of time.
“There’s a lot of information being shared to level the foundation,” she said.
The company said that it would have broke even last year without Brexit, or the U.K.’s vote last year to leave the European Union. Management said China’s results were solid and that it was seeing the “light at the end of the tunnel” after weak conditions in South America.
As Trump urges a shift in production from nations like Mexico to the U.S., automakers have faced concerns about waning demand after a long ascent for auto sales. U.S. sales for the Big Three automakers fell last month, even though Ford and GM expressed optimism about the year ahead.
In reporting January sales, GM said it would “continue to match production with customer demand.” The company added: “Previously announced plans to reduce passenger car production at plants in Lordstown, Ohio, and Lansing, Mich., were implemented at the end of January.”
Ford CEO Mark Fields last month said he felt the company had “the appropriate amount” of plants in the U.S. and that there were no current plans to build new ones.
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GM also began selling its new all-electric Bolt, and investors will be eager to digest any further morsels of guidance as Tesla (TSLA) is set to begin production of the Model 3 and make it available for sale later this year.
In January, GM delivered 1,162 Bolt cars, bringing the total since its mid-December debut to 1,741. The plug-in hybrid Chevrolet Volt rose 62% vs. January 2015 to 1,611.
Late Monday, CFRA Research issued a report that warned Tesla will see competition on electric vehicles, though it enjoys a head-start on autonomous technology.
“However, as more competitors are joining the electric vehicle space, we see risks increasing that Tesla’s dominance in all-electric vehicles will wane by the time the market reaches critical size,” according to analyst Efraim Levy in a statement.
Still, Tesla shares fell 0.1% to close at 257.48 after hitting 260 intraday, briefly topping a cup-with-handle buy point of 258.56. Tesla rose 2.6% on Monday.