Ryan Payne, President of Payne Capital Management, appeared on “Mornings with Maria” to explain the latest data on the auto industry.
General Motors Co and Ford Co could report lower profits in quarterly results this week as the industry’s big bet on electric vehicles fails to pay off and a cyberattack on a critical computer network used by dealers disrupts sales.
GM is expected to report a 7.7 percent drop in second-quarter net profit, while Ford is expected to report a 10 percent profit drop, according to LSEG data. GM is due to report results on Tuesday, Ford the following day.
A cyberattack that caused an outage at CDK forced the retail technology provider to shut down key software systems used by more than 15,000 U.S. auto dealerships in June, a key sales month for the industry.
Consulting firm Anderson Economic Group estimates dealers will lose about $1 billion in total due to the outages.
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GM is expected to see its quarterly net income fall 7.7% due to slowing demand for EVs and the cyber attack on CDK. (Photo by Paul Hennessy/SOPA Images/LightRocket via Getty Images / Getty Images)
Slowing growth in EV sales is making it harder for automakers like GM and Ford to cut costs and increase sales volumes to a level that would make them profitable more quickly.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| debt | Ford Motor Company | 14.12 | +0.14 | +1.00% |
| GM | General Motors | 49.56 | +1.26 | +2.61% |
“Established automakers, who need to make the same investments as startups in vehicle design and manufacturing facilities, can’t expect to turn a profit anytime soon,” said Sam Fiorani, vice president at research firm AutoForecast Solutions.
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The EV price war between Tesla and other automakers is expected to put pressure on automakers’ profit margins. (Photo: Patrick T. Fallon/AFP via Getty Images/Getty Images)
Long-established U.S. automakers also feel their electric vehicle ambitions are being stifled by fierce competition from Chinese EV makers and Tesla, which has sparked a global price war.
GM last week declined to repeat its previously announced forecast of having production capacity for 1 million EVs in North America by the end of 2025.
Ford also revealed plans to use a Canadian factory that had been reserved for future electric vehicle production to build large gasoline-powered versions of its flagship F-Series pickup truck.
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Ford is expected to see its quarterly profit fall 10% due to changing consumer preferences for EVs and the CDK cyberattack on its dealership software. (Reuters/Francois Lenoir/Reuters Photo)
Ford previously said it would delay the launch of a new three-row electric vehicle, which would be built at its Oakville, Ontario, assembly plant, from 2025 to 2027. Both Detroit automakers earlier this month also reported slowing quarterly sales growth.
Analysts at Evercore ISI said they remain positive on GM and especially Ford, expecting the Detroit automaker to issue guidance toward the high end of its previous full-year outlook.
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Investors will be focusing on the details of their EV plans, as both automakers cited consumer demand as the reason for postponing their EV forecasts, and also comment on the impact of CDK’s shutdown.
