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GM Reports Hefty $2.7 Billion Profit - Rank & File Demand Slice of Pie as Union Talks Loom

By Belal Awad · July 25, 2023

In brief…

  • General Motors Q2 earnings exceeded expectations with $44.7 billion in revenues.
  • Ex-Ford CEO Mark Fields praised GM's performance, citing 25% YoY revenue growth and pent-up demand.
  • GM has placed a big bet on EV with the low-cost Chevy's Equinox EV launch.
  • Upcoming union negotiations will be tough as as labor seeks solid pay raises amid strong industry profits.
A worker installs a seat into a Ford vehicle at the Kansas Cit, Missouri Plant  Wikimedia Commons

General Motors released its second-quarter earnings report, surpassing expectations with adjusted earnings of $1.91 per share and revenue of $44.7 billion. Former Ford president and CEO Mark Fields discussed the GM’s numbers and the implications of its ongoing transition to electric vehicles (EVs) on CNBC.

According to Fields, the quarter showcased a robust performance for GM, with revenues experiencing a remarkable 25% year over year. “The pent-up demand is still there, and customers are still willing to pay for good product,” Fields said, noting the company’s successful positioning in the market.

However, the challenges GM and the entire automotive industry face in the EV market are very real, said Fields. Despite record-breaking sales, EV demand is not keeping up with production, leaving a glut in inventory. Fields stressed the importance of Chevy’s upcoming Equinox EV launch, a big moment for GM. With a competitive price of roughly $30,000, the Equinox is designed to address the cost fatigue that has plagued the emerging EV market.

Taking a broader view of EVs, Fields observed, “If you look at history… when you think of Netflix… there was a big issue around can that company and [whether] that industry [could] make that transition. I think they were successful… The key there is they made lives easier for consumers.” Similarly, he said, addressing challenges like pricing and charging infrastructure will determine the speed of EV adoption.

On the approaching negotiations with the United Auto Workers, Fields warned that automakers, including GM, will be facing a tough bargaining process. With the industry enjoying substantial profits, the UAW’s new leadership will dig in on winning solid pay raises for its members - especially after three years of high inflation.

Fields said, “It’s going to be a contentious set of negotiations… There’s a perception amongst the rank and file that they want to get their fair share… The automakers are going to have a very difficult set of negotiations… Their profits have been very high. There’s a little bit of a labor renaissance… in the US… And you have, importantly, a new leadership at the UAW that feels that they have a mandate to improve their salaries, get cost of living adjustments, improvements in pension and health care.”

He added that “automakers are going to have to come up with a fair contract, but it’s going to add costs to their business. And that’s why you’re seeing… folks like GM up their cost reduction objectives.”