General Motors Rakes In The Profit And Workers Are Getting A Big Bonus As A Result

Illustration for article titled General Motors Rakes In The Profit And Workers Are Getting A Big Bonus As A Result
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1st Gear: GM Made $12.8 Billion In Pretax Profits Last Year

GM sold 450,000 fewer vehicles to dealers last year than they did in 2016, but their profits, thanks to production halts and some other shrewd maneuvering on the part of the company, remained steady. As a result, many workers will get $11,750 in profit-sharing checks, according to the Detroit Free Press.

From the Freep:

Pretax profits dropped in North America, from $12.4 billion to just under $12 billion, and the profit-sharing checks will represent a slight dip from the $12,000 last year. But the company said it returned to profitability in South America.

The company’s earnings per share were up more than 8% to $6.62, which beat the consensus of as high as $6.50 per share. For the fourth quarter, the company made more than $3 billion before taxes and had earnings per share of $1.65.


“The actions we took to further strengthen our core business and advance our visions for personal mobility made 2017 a transformative year. We will continue executing our plan and reshaping our company to position it for long-term success,” Chairman and CEO Mary Barra said in a news release.

It’s also good to be a GM worker at the moment, even if their profit-sharing checks are down just slightly from last year’s, which saw payments of $12,000 to employees.

GM’s profit-sharing checks are higher than its cross-town Detroit rivals. Ford planned to provide profit-sharing checks of $7,500, and Fiat Chrysler said it would pay its UAW-represented workers an average of $5,500. FCA also said it would give U.S. workers, aside from senior leadership, $2,000 bonuses.


It’s good to be in a union.

2nd Gear: Dieselgate Will Never Die

German prosecutors have now searched the homes of current and former Audi employees in their ongoing attempts to determine who knew what and when.


According to Reuters:

Audi, which is the biggest contributor to Volkswagen’s (VOWG_p.DE) profit, admitted in November 2015 that its 3.0 liter V6 diesel engines were fitted with a device deemed illegal in the United States that allowed cars to evade emissions limits.

Prosecutors had raided Audi last March to investigate who was involved in the use of any illicit software used in the affected 80,000 VW, Audi and Porsche cars in the United States.

And last week, they searched the homes of several current and former Audi employees.

Now the probe into suspected fraud and illicit advertising relates to a total of at least 210,000 vehicles with 3.0 liter engines sold in Europe as well as the United States since 2009, the Munich prosecutors’ office said on Tuesday.


The whole scandal is so slow-motion that I feel like when it’s finally over we’ll have driverless cars running on solar power, with diesel in our distant past.

3rd Gear: Toyota Is Killing It, Thanks In Part To Trump

One useful way to think about President Donald Trump’s tax cuts, which reduced the corporate tax rate from 33 percent to 21 percent, is who or what they have turned out to be good for. Today’s example: Toyota, which is a multinational corporation that doesn’t need the help. Toyota got $2.59 billion alone from the tax cuts, according to Automotive News, and made 54 percent more in operating profits in its fiscal third quarter compared to last year.


From Auto News:

The robust results prompted Japan’s biggest automaker to lift, for a third time, its earnings forecast and target record net income for the current fiscal year ending March 31, 2018.

Operating profit rose 54 percent to $5.98 billion in the company’s fiscal third quarter. Net income nearly soared 94 percent to $8.36 billion, the company said in its earnings announcement.

The U.S. tax breaks, which reduced the corporate rate to 21 percent from 33 percent, took effect on Jan. 1. But Toyota booked the impact in the company’s fiscal third quarter, which ended Dec. 31, accounting for a revaluation of deferred tax assets and liabilities on its U.S. operations.

Revenue increased 7.4 percent to $67.55 billion.

I’ve been doing this for a hot minute now, but the some of the numbers still astound me. Toyota sold 2.63 million vehicles between October and December! That’s a lot of vehicles.


4th Gear: Nissan’s Putting Its Money Where Its Mouth Is In China

They plan to spend $9.5 billion to try to become the clear No. 3 automaker in China. They’re currently an also-ran, along with Ford, Honda, and Toyota, all of whom trail the country’s biggest automakers, which are Volkswagen and GM. But now, according to Reuters, Nissan is getting serious.


From Reuters:

Nissan plans to achieve the objective, dubbed its “Triple One” strategy, by focusing on electric cars and Venucia, a no-frills local brand Nissan operates in China - two market segments expected to see a surge in demand. It also aims to boost sales of light commercial vans and trucks.


“We aim to break away from this second-tier group and become a top-3 China automaker,” Nissan’s China chief Jun Seki said in an interview with Reuters.

“We need to go full-throttle aggressive,” Seki said. “If we didn’t do that, we would fall behind and fail to grab market share otherwise we could take.”


Do yourself a favor and go full-throttle aggressive in all things.

5th Gear: One More GM Item

Salespersons at GM dealers are mad offline thanks to some changes the company has made to its payments to dealers. That has meant that sales workers can make a third less in bonuses than they could before in one company program, according to Automotive News. The timing for the move is bad, considering that everyone else in the industry, including GM themselves, are benefitting from Trump’s tax cuts and also handing out bonuses.


From Auto News:

“You see companies like Chrysler giving back to their employees, and here you have this so-called American brand, and they’re taking away from their employees,” said a sales associate at a GM brand store who spoke on condition of anonymity.


In its 2018 SFE Consultant Performance Program, a copy of which was obtained by Automotive News, GM has cut the top amount a salesperson can earn this year to $150 per car from $225 in 2017, assuming retail sales of at least 11 Chevrolet vehicles, seven GMCs or five Buicks in a month. The bonuses are smaller for fewer sales. Bonuses for fleet sales are calculated separately.

The optional SFE program is for Buick, GMC and Chevrolet dealers. Cadillac is not included in the 2018 program after last year’s launch of Project Pinnacle, Cadillac’s incentive program.

Some dealers worry such a steep cut could lead to higher turnover in sales personnel. Many say they may have to make up the difference. Others disagree, saying that if the dealership pays well, then GM’s contribution is merely an extra bonus and losing some of it will have little impact on sales staff morale.


Reverse: The Honda Insight Is Born


Neutral: What’s GM Doing Right At The Moment?

We know Ford’s having a bit of a profit margin problem right now, much to the chagrin of investors. What can they learn from the General?

News Editor at Jalopnik. 2008 Honda Fit Sport.


What is GM doing right? I think Mary Barra is owed an apology from a lot of people. She has been doing a great job and gotten a lot of criticism for her decisions, and now they are paying off. Cutting all those countries that were never profitable was the smart thing to do. The product line is also about the best they have ever had.