General Motors Co (GM) said on Wednesday that it expects in 2016 to ring up its first profit in Europe in more than a decade and that it will also hit targeted North American operating margins that year.
The projections came two days after its smaller rival, Ford Motor Co, disappointed investors with its financial outlook.
GM had previously said it would hit those targets by mid-decade, but it offered the more specific timetable and outlined other forecasts, including its plans for the critical Chinese market, at its investor meeting at the company’s test track outside Detroit.
GM shares were up 1.8 percent at US$32.50 in the afternoon on Wednesday. The stock is down about 20 percent this year and trades below its autumn 2010 initial public offering price of US$33.
Investors and analysts also worry that GM is at the peak of its product cycle, having launched new versions of its full-size pickup trucks and SUVs, but GM president Dan Ammann said those views are “sadly mistaken,” pointing to plans to offer new or refreshed models at a rate of about 30 to 50 percent of the automaker’s annual volume through 2019.
“This is not the end. It’s just the very beginning,” he said.
On Monday, Ford slashed its profit outlook for this year, blaming higher recall costs in North America and steeper losses in Russia and South America. It also offered a disappointing profit forecast for next year.
GM did not provide an update for its overall financial results for this year, and analysts said the company faces the same market pressures hurting Ford.
GM’s target for North American operating margin in 2016 is 10 percent. GM chief executive officer Mary Barra said the margin target for Europe factored in steps to minimize the impact of the downturn in the Russian market. GM last reported a profit in Europe in 1999.
Barra, who took over as CEO in January, also said GM would not change its estimate for the expected cost to establish the fund to compensate accident victims for the defective ignition switch linked to at least 23 deaths. GM previously took a US$400 million charge for the fund and said the cost could rise another US$200 million.
In addition to the outlook for Europe and North America, GM said it is targeting overall operating margins of 9 to 10 percent by early next decade. That would be up from 6.3 percent, excluding recall costs, in the second quarter.
One way it plans to achieve its profit target is by reducing the number of core platforms on which it builds all its vehicles globally, from 14 next year to four in 2025.
GM is also doubling down on the world’s largest auto market, outlining plans to invest US$14 billion in China through 2018 to open five assembly plants and launch 60 new or refreshed vehicles. GM Financial also expects to enter China later this year, giving the automaker greater flexibility to pursue sales.
Another key ambition is turning its Cadillac luxury brand into a globally recognized name. It expects to introduce four new Cadillac vehicles in North America next year, including the CT6 sedan it previously outlined. The brand also will introduce nine new models in the next five years in China.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to