General Motors and the Latest Auto Market News

The third quarter is nearly over and that means it’s time to start thinking about earnings. This week, we saw some interesting downgrades of auto stocks because analysts don’t think the environment is good for the bottom line.

Sales are falling slightly, default rates on car loans are rising, China is a mess, and increased competition could eat into margins, especially for EVs.

I want to lay out how I see the backdrop for GM’s quarter and the next year in the auto industry with appropriate context around what we should expect.

Auto Market Macro Picture

Edmunds expects shipments to be 3.9 million units in the third quarter of 2024, down 2.3% from a year ago. The good news is discounting hasn’t hit the industry much at all.

GM specifically is expected to see volume sales down 3.3% from a year ago and 6.3% from the second quarter. The only company gaining ground is Honda with Stellantis (Jeep, Dodge, and Ram) sales falling 10.5% from a year ago.

GM Financial will also be a question. According to UBS, prime delinquencies are higher than at any point since 2009 at 5.98% and non-prime delinquencies are at a similar non-crisis record of 0.62%.

In the second quarter 2024 earnings report, GM Financial said its delinquency rate was 2.9%, up from 2.5% a year ago. We know the financing arm has been more conservative with lending practices, but the high price of vehicles from 2021 to 2023, falling used car values, and higher inflation are putting pressure on consumers and the value GM can recoup in the case of losses.

All of this said, don’t be surprised if revenue falls in Q3 2024.

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