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How Does GM Make Its Money?

How Does Normal Motors (GM) Make Cash?

Normal Motors Co. (GM) is among the main car and truck producers on the planet. GM continues to supply automobiles underneath its conventional manufacturers, similar to Buick, but additionally produces automobiles in China by way of joint ventures. GM earns the vast majority of its revenue and revenue from car gross sales but additionally from its financing arm referred to as GM Monetary.

GM is within the midst of a metamorphosis, through which the corporate is shifting a few of its manufacturing from carbon-based automobiles to electrical automobiles (EVs). This text comprises an evaluation of how Normal Motors earns its income and revenue, in addition to a glance into the corporate’s future.

Key Takeaways

  • GM manufactures automobiles underneath a number of manufacturers, together with Chevrolet, Buick, GMC, and Cadillac, and two manufacturers in China.
  • GM delivered greater than 6.8 million automobiles globally in 2020, through which greater than 2.5 million have been offered in the US.
  • GM’s 2020 annual income was $122.5B and web revenue or revenue was $6.4 billion.
  • GM is within the course of of reworking to electrical automobiles with the aim of changing into the market chief in EVs in North America.
  • In June of 2021, GM introduced a dedication of $35 billion in investments into electrical automobiles by way of 2025.

About Normal Motors (GM)

Based in 1908 by William C Durrant, Normal Motors (GM) employs 155,000 staff globally, together with greater than 88,000 in the US. GM is headquartered in the US in Detroit, Michigan.

GM has 122 vegetation and amenities within the U.S., together with 11 meeting vegetation, 19 components distribution facilities, and battery vegetation. GM’s international manufacturing operations are situated all through six continents.

GM Manufacturers

Normal Motors manufactures cars and vehicles underneath a number of manufacturers, together with Chevrolet, Buick, GMC, and Cadillac.

GM additionally manufactures automobiles and vehicles underneath two model names in China referred to as Wuling and Baojun. The corporate has a complete of 10 joint ventures in China. It additionally does enterprise through joint ventures as Normal Motors India, Normal Motors Egypt, and GM South Africa.

GM Subsidiaries

One of many subsidiaries that GM owns is OnStar Corp., which supplies in-vehicle communications, safety, hands-free calling, navigation, and distant diagnostics methods through a subscription service. OnStar presents a crash response system with built-in car sensors to detect an car crash, reporting it to authorities. The system additionally supplies stolen car help, which locates and aids within the restoration. It even presents an in-vehicle Wi-Fi hotspot service, permitting clients to attach through mobile phone.

GM Monetary, which supplies auto loans to GM clients, is a wholly-owned finance subsidiary of GM headquartered in Fort Value, Texas. GM Monetary has operations in North America and Latin America in addition to a 35% fairness curiosity in a three way partnership with SAIC-GMAC Automotive Finance Firm Restricted in China.

GM’s Gross sales, Income, and Revenue

For a lot of firms, 2020 was a difficult yr because of the Covid-19 pandemic, which prompted momentary shutdowns of producing vegetation, halting manufacturing, gross sales, and deliveries.

Car Gross sales

GM delivered greater than 6.8 million automobiles globally for 2020. Of that complete, GM offered greater than 2.5 million automobiles in the US.

GM completed the yr sturdy, promoting 771,323 in This fall 2020, which was the very best retail gross sales efficiency for a fourth quarter since 2007. Complete gross sales for the quarter have been up 5% and deliveries up 12% in comparison with This fall 2019. Nonetheless, because of the pandemic, complete deliveries for all of 2020 have been down 12%.

A few of the key manufacturers that drove gross sales for GM in This fall 2020 versus This fall 2019 embody the next:

  • GMC Sierra had its finest This fall retail gross sales, with deliveries up 14%, and full-year retail gross sales have been up 9% for the yr.
  • 5 GMC fashions had double-digit progress, together with the Yukon and Yukon XL (up 41%), Canyon (up 42%), Sierra (up 14%), and Acadia (up 26%).
  • Retail deliveries for Chevrolet have been up 12%, and the manufacturers that had sturdy share gross sales progress included the Corvette (up 158%), Bolt EV (up 106%), Tahoe (up 78%), and Suburban (up 56%) when evaluating This fall 2020 to This fall 2019.

GM offered 2.9 million automobiles in China for 2020. Its strongest gross sales progress got here from Wuling, which grew deliveries by 8.8%, promoting over 1 million automobiles. Buick deliveries have been up 4.1%, whereas Cadillac deliveries have been up 7.9% for the yr.

Transaction costs set a This fall report at $41,886 and a full-year report at $39,229 per unit. Steve Carlisle, who’s GM’s Government Vice President and President of GM North America, stated of the outcomes:

“GM outperformed the trade within the quarter and the total yr by a big margin due to our manufacturing and provide chain groups, and sellers serving to preserve individuals protected at work and our launches on observe.”

Income and Revenue

In 2020, Normal Motors’ annual income was $122.5B and the corporate reported $6.4 billion in net income or revenue.

The desk under comprises highlights from the most important drivers of GM’s 2020 income and revenue by area. Please notice that GMI means GM Worldwide, and GMA is North America. All knowledge was obtained from GM’s 10K annual report for 2020.

GM Income from Gross sales for 2020
 GMNA  GMI  Complete Auto Income  GM Monetary  2020 Complete
 $96.73B  $11.58B  $108.66B  $13.83B  $122.48B
Knowledge obtained from GM’s 10K annual report from 2020.

Earnings before interest and taxes (EBIT) is a standard metric for measuring the profitability of firms because it represents the revenue with out the interest expense on debt and tax expenses. The desk under comprises GM’s full-year 2020 EBIT figures for the assorted areas.

GM’s Full-Yr 2020 EBIT
 GMNA  GMI  GM Monetary
 $9.10B  (0.5)B  $2.7B

Following the This fall-2020 monetary outcomes, GM’s Chief Economist, Elaine BuckBerg, talked about that GM seems to be ahead to the spring of 2021 through which shoppers, companies, and the U.S. economic system return to a extra regular vary of actions lifting auto demand and client sentiment.

GM’s Future Transition to Electrical Autos

In August of 2021, GM introduced that 40-50% of its annual U.S. gross sales might be electrical automobiles by 2030. Electrical automobiles embody battery-electric, fuel-cell, and plug-in hybrid automobiles as a part of the corporate’s dedication to a zero-emissions, all-electric future, eliminating tailpipe emissions from light-duty automobiles.

In June of 2021, GM introduced a dedication of $35 billion in investments into electrical automobiles by way of 2025, together with the development of two new battery-cell vegetation in the US. Beforehand, GM had dedicated an preliminary funding of $20 billion from 2020 by way of 2025.

The corporate has said that it’s going to speed up its transformative technique to electrical automobiles with the aim of changing into the market chief in EVs in North America and a world chief in battery and gas cell know-how. GM can be dedicated to being the primary firm to soundly commercialize self-driving know-how.

Relating to the corporate’s future transformation, GM Chair and CEO Mary Barra said:

“GM is concentrating on annual international EV gross sales of greater than 1 million by 2025, and we’re rising our funding to scale quicker as a result of we see momentum constructing in the US for electrification, together with buyer demand for our product portfolio.”

The Backside Line

For over a century, GM has been a frontrunner within the auto trade. It stays to be seen whether or not GM can meet its objectives of reworking to an electric-vehicle firm within the close to future. Nonetheless, the income earned from carbon-based car gross sales will doubtless get replaced, partially, by EV income. The transformation will undoubtedly have challenges and price billions of {dollars}. GM should additionally deal with opponents that will even be ramping up EV gross sales and manufacturing within the coming decade.

Investopedia requires writers to make use of main sources to help their work. These embody white papers, authorities knowledge, unique reporting, and interviews with trade consultants. We additionally reference unique analysis from different respected publishers the place acceptable. You possibly can be taught extra in regards to the requirements we observe in producing correct, unbiased content material in our
editorial policy.
  1. Normal Motors. “Brands.” Accessed Sept. 18, 2021.

  2. Normal Motors. “Frequently Asked Questions.” Accessed Sept. 18, 2021.

  3. Securities and Alternate Fee. “General Motors, Form 10-K 2020, Page 96.” Accessed Sept. 18, 2021.

  4. Normal Motors. “GM Will Boost EV and AV Investments to $35 Billion Through 2025.” Accessed Sept. 18, 2021.

  5. Normal Motors. “Corporate News Room, About GM China.” Accessed Sept. 18, 2021.

  6. Securities and Alternate Fee. “General Motors Company Subsidiaries And Joint Ventures Of The Registrant As Of December 31, 2020.” Accessed Sept. 18, 2021.

  7. Onstar. “Onstar Can Help.” Accessed Sept. 18, 2021.

  8. GM Monetary. “GM Financial Is A Global Provider Of Auto Finance Solutions.” Accessed Sept. 18, 2021.

  9. Normal Motors. “GM 2020 Sales Far Outperform the U.S. Industry in Fourth Quarter and Calendar Year.” Accessed Sept. 18, 2021.

  10. Normal Motors. “GM Delivers 2.9 Million Vehicles in China in 2020.” Accessed Sept. 18, 2021.

  11. Normal Motors. “News Release Details,  GM Reports Strong Second-Quarter 2021 Results.” Accessed Sept. 18, 2021.

  12. Normal Motors. “Ford, GM and Stellantis Joint Statement on Electric Vehicle Annual Sales.” Accessed Sept. 18, 2021.

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