Let’s cut out the financial page accounting details and go straight to the revenue and profits of General Motors and Fiat Chrysler, which reported first-quarter earnings Thursday morning, and Ford Motor Company, which did the same Wednesday. This is important to car enthusiasts because without healthy profits, resources for world-class Chevrolet Corvettes, Jeep Wranglers, Ford Mustangs and the like get too thin. The Motown comparo, below, includes earnings before income taxes, in the case of this number, using calculations that are not Generally Accepted Accounting Principles as determined by the U.S. Securities and Exchange Commission.
The Q1 ’18 comparo:
Gross Revenue Net Income EBIT
GM $36.1 billion $1.1 billion $2.6 billion
Ford 42.0 billion $1.7 billion $2.2 billion
FCA 32.7 billion net* $1.2 billion* $1.6 billion*
Fiat Chrysler, based as a corporation in The Netherlands, reports net revenue instead of the gross revenue figures released at GM and Ford. Fiat Chrysler’s results were reported in euros and converted to U.S. dollars using Thursday’s currency exchange rates as of 12:30 p.m. Eastern time.
While Ford announced on Wednesday that the Ford marque would not update any car lines other than the Mustang—a new one is coming in calendar 2020—and a crossover version of the Focus, which is due later this year, GM’s CEO, Mary Barra, told Wall Street analysts that her company would “effectively play in a segment that although is declining, there is significant opportunity.”
Compared with the first quarter of 2017, GM’s net revenue was off 3.1 percent, and its net income of $1.1 billion was down 58.7 percent. Analysts generally lauded GM, however, for quarterly results that were better than they had predicted.
Profit margins are generally much better on SUVs than on sedans. Think of how much more a Ford Escape costs than a Ford Focus, using roughly the same architecture, and you can understand why automakers are happy to fulfill the burgeoning demand for sport/utilities. But Barra warned that more unibody, car-based SUVs entering the market would affect profitability. As competition in the various utility segments gets stiffer, the level of incentives on these models will become more like it is today for compact and midsize sedans.
Barra also said GM expects “about a $900-million headwind” or extra cost against revenues to pay for the launch of the 2019 Chevrolet Silverado and GMC Sierra pickup trucks.
At Fiat Chrysler, CEO Sergio Marchionne reportedly expressed frustration with the launch of the new Ram 1500 pickup truck, which went on sale in March. Because it was behind schedule, the Ram 1500 launch cost Fiat Chrysler more money. So the automaker’s record first-quarter profit might have been even bigger.
While Fiat Chrysler’s net revenues were off 2 percent compared with Q1 of 2017, net profit was up 59 percent, and adjusted EBIT was up 5 percent.