Research Update: General Motors Co. Outlook Revised To Stable From Negative On Steady Profits And Improved Cash Flow Prospects

Despite the ongoing risks stemming from higher commodity costs and supply chain bottlenecks, we expect General Motors Co. (GM) to sustain above-average EBITDA margins and solid cash flow in 2022 and 2023, which will help it fund its investments in electrification and autonomous vehicles (AVs). Therefore, we revised our outlooks on GM and its subsidiary, General Motors Financial Co. Inc. (GMF), to stable from negative and affirmed our 'BBB' issuer credit ratings. The stable outlook reflects our expectation that the strong profitability of the company's truck and utility vehicle portfolio in North America (EBIT margins approaching 10%), ongoing cost-reduction efforts, and cash dividends from its Chinese joint ventures (JVs) will likely enable it to sustain free operating cash flow (FOCF)

...- Despite the ongoing risks stemming from higher commodity costs and supply chain bottlenecks, we expect General Motors Co. (GM) to sustain above-average EBITDA margins and solid cash flow in 2022 and 2023, which will help it fund its investments in electrification and autonomous vehicles (AVs). - Therefore, we revised our outlooks on GM and its subsidiary, General Motors Financial Co. Inc. (GMF), to stable from negative and affirmed our '###' issuer credit ratings. - The stable outlook reflects our expectation that the strong profitability of the company's truck and utility vehicle portfolio in North America (EBIT margins approaching 10%), ongoing cost-reduction efforts, and cash dividends from its Chinese joint ventures (JVs) will likely enable it to sustain free operating cash flow (FOCF) to debt in the 15%-25% range over the next two years....

Research Update