General Motors Co.

Overview Key strengths Key risks Solid competitive position in profitable full-size trucks and sport utility vehicle (SUV) segments in North America. Higher pricing pressure and labor costs will offset the company's fixed cost reduction. Low S&P Global Ratings-adjusted leverage (debt to EBITDA under 1x as of Sept. 30, 2023) and strong cash flow generation of over 2% of sales. Increasing competition and high costs in the electric vehicle (EV) segment from new and established original equipment manufacturers (OEMs). Strong liquidity (automotive cash and marketable securities of over $19.5 billion) Somewhat high exposure to residual risks given the size of its leased-assets portfolio. Although the company faced incremental cost pressures from higher warranty costs due to inflationary factors this year, it

...We expect higher labor costs and rising pricing pressure to lower General Motor Co.'s (GM) EBITDA margins below 10% for 2024 and 2025. Although the company faced incremental cost pressures from higher warranty costs due to inflationary factors this year, it improved its performance across segments, resulting in S&P Global Ratings-adjusted EBITDA margins of 9.9% for the nine months ended Sept. 30, 2023. We expect GM's EBITDA margins be about 10% in 2023 (excluding the strike-related production disruption impact) before declining below 10% in 2024 onwards owing to higher labor-related expenses coupled with lower margins from a weaker product mix and pricing pressure relative to recent periods. Following the recent ratified agreement reached with the United Auto Workers, higher labor- related expenses will lead to annual incremental costs (relative to its previous contract) of roughly $200 million in 2023, $1.5 billion in 2024, $1.8 billion in 2025 , and over $2 billion in both 2026 and 2027....

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