Tear Sheet: General Motors Co. Solidifies Its Ratings Cushion On Strong First-Quarter Results And Raised Guidance

The company's earnings guidance supports our expectation for solid EBITDA margins of about 9%-10% in 2024 and 2025. The market share gains GM has realized from its newer products in popular segments, including full-size pick-ups and small SUVs, appear sufficient to offset industry pricing pressure, which will help it maintain incentive discipline. Our base-case forecast assumes tougher conditions for the remainder of the year, which will cause GM?s EBITDA margins to remain slightly weaker relative to the median for investment-grade automakers (see the chart below) following its abnormally high margins in 2021 and 2022. This is because for 2024 and 2025 we assume higher labor-related expenses, a weaker sales mix (due to the ramp-up costs for electric vehicles [EVs]), and

...April 24, 2024 General Motors Co.'s (GM) first-quarter earnings and stronger guidance indicate solid operational momentum. The company's earnings guidance supports our expectation for solid EBITDA margins of about 9%-10% in 2024 and 2025. The market share gains GM has realized from its newer products in popular segments, including full-size pick-ups and small SUVs, appear sufficient to offset industry pricing pressure, which will help it maintain incentive discipline. Our base-case forecast assumes tougher conditions for the remainder of the year, which will cause GM's EBITDA margins to remain slightly weaker relative to the median for investment-grade automakers (see the chart below) following its abnormally high margins in 2021 and 2022. This is because for 2024 and 2025 we assume higher labor-related expenses, a weaker sales mix (due to the ramp-up costs for electric vehicles [EVs]), and ongoing pricing pressure. Based on market share trends, the company's progress on its $2 billion...

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