Earnings at General Motors Co. and Ford Motor Co. for the second quarter of 2020 showed improvements over the virus-stricken first quarter. General Motors reported a net loss of $0.8 billion, and Ford reported earnings of $1.1 billion after a net loss of $2 billion during the first financial quarter. Fellow Detroit-based automaker Fiat-Chrysler Automobiles NV is releasing its own quarterly results July 31.
The results are a bit of a reversal from last quarter, when General Motors was the only major U.S. automaker to avoid losing net income: the parent brand of Chevrolet and GMC marked a net income of $276 million in the first quarter of 2020, while Ford reported a net loss of $2 billion.
Cash flow at GM fell $9 billion, a loss of $11.6 billion year over year, and global sales fell by more than 24%. In a statement, the parent company of Chevrolet and GMC said it implemented aggressive budgeting measures during the quarter, including zero-based budgeting, reductions in advertising, compensation deferments and employee furloughs. “We have a track record of making swift and strategic decisions to ensure our long-term success for the benefit of all our stakeholders,” said Mary Barra, CEO of GM.
Dhivya Suryadevara, CFO of GM, said that parts of the earnings report demonstrated the company’s “resiliency,” specifically the company’s adjusted earnings before taxes in North America of $0.1 billion “despite losing 8 of 13 weeks of production.” GM attributed the high earnings to better-than-expected Chevrolet and GMC truck sales, and in a call with investors, Suryadevara said GM should be on track to pay back $16 billion in loans by the end of the year if recovery continues without further disruption.
Meanwhile, Ford Motors posted a net income of $1.1 billion following last quarter’s loss of $2 billion, avoiding a second quarter of net losses. The Dearborn, Michigan-based company received a substantial boost from Volkswagen, which completed its investment in Argo AI, which saw a $3.5 billion gain in investment. Ford and VW plan to work with Argo AI to eventually deliver self-driving cars to the public market.
On a conference call with analysts, Ford CEO Jim Hackett said the results were “much better than we expected just three months ago.” Despite the unexpectedly rosy results Ford anticipates that it will lose money over the course of the year.
Both GM and Ford took the opportunity to showcase some recent achievements. General Motors noted that it had broken ground on Ultium Cells LLC’s new battery cell manufacturing facility in Lordstown, Ohio as it moves towards electrifying its fleet of cars. Ford, meanwhile, touted its delivery of coronavirus-related products, including more than 18 million face shields, 33 million face masks, 32 thousand powered respirators in collaboration with 3M, and about 7,500 new ambulances.
