CEO of General Motors Company (NYSE:GM) plans to operate all the plants to manufacture EV and derive handsome profits mainly in China because she expects a pickup in demand. She anticipates a recovery in demand for new vehicles despite ongoing coronavirus crisis.
Low inventory
Several auto plants are closed during coronavirus crisis for two months, and they are running low on inventory levels for new vehicles in the US. Auto players like Fiat Chrysler Automobiles NV (NYSE:FCAU), Ford Motor Company (NYSE:F), and General Motors dominate the pickup trucks that offer higher margins.
Consultancy firm anticipates thin margins
According to Alix Partners, a consultancy firm, the automakers expect to derive lower margins because of heavy investment in electric vehicle development, though consumers prefer gas-guzzling vehicles. Commenting on the prediction, Barra said the company is thrilled with the EVs product portfolio. She further said the company will move on the same track because prospects are bright and do not foresee any decline in profits.
Auto sales stage a recovery in May
The sales of auto surged by 14.5% in May 2020 compared to the same period of the previous year. It is the second consecutive increase month-wise and shows the auto sector is recovering from its lows after COVID-19 pandemic. General Motors expects growth for vehicles like EVs in China going forward, Barra is optimistic and betting on China for better growth in volumes and profits.
Restarts facilities in North America
General Motors restarted assembly and component production smoothly in North America. The company implemented safety measures like wearing masks and maintaining distance for its employees and vendors and customers. Its suppliers also resumed operations. Beginning June 1, 2020, the company expects to improve manufacturing to satisfy the demand from customers.
General Motors begins the operation of three cross-over plants in Canada and the US in two shifts. It will produce full size and midsized pickups at three assembly plants in the US, and will gradually move to three shifts from a single shift.
According to Barra, 2020 will be remembered as a disastrous year in history because of social unrest and disruptions created by coronavirus crisis.
