Despite the decline of their profit margins and earning in the fourth quarter, the CFO of General Motors, said the automaker would have “another strong year” in 2017. However, part of reaching that goal might mean more production cuts in the months to come as an effort to avoid heavy discounting on slow-selling cars.
“We’ll continue to be very, very disciplined on aligning supply and demand,” CFO Chuck Stevens told reporters at GM’s headquarters. “We will react to the market dynamics.”
In the fourth quarter, the automakers adjusted earnings, before interest and taxes, fell to $2.4 billion, which was a 14 percent decline. Their global margins declined from 7 percent to 5.4 percent in 2015.
For the third consecutive year, GM is predicting margins of more than 10 percent in North America. The automaker also predicted a continued loss in Europe, with 2018 making it the company’s first chance to breakeven in that market.
In North American, GM will be introducing redesigned versions of high-volume crossovers when demand in those areas keep surging.
“By almost any measure, 2016 was a great year for our business and I am confident we can achieve even stronger results,” GM CEO Mary Barra said in a statement. “We’ll work to build on our momentum, while continuing to drive our company to innovate and shape the future of mobility.”
For the entirety of 2016, GM’s profit margins and revenue climbed to a post-bankruptcy record. At the same time, the net income for the year declined 2.7 percent.
The company managed to generate a 2016 record $12 billion profit in North America, which is 9.3 percent more than was generated a year ago.
GM also managed to shrink its loss in other areas. The automaker shrank its loss in Europe by two thirds and by 40 percent in South America.
For 2016, GM posted a global net income of $9.4 billion, which is down from $9.7 billion in 2015. Earnings in 2017 for the company will stay flat or increase slightly from the previous year, Stevens said.
“We have an extremely strong product launch cadence,” Stevens said. “We’ll be going from the oldest crossover lineup in the industry to the youngest.” Stevens also noted that executives are hopeful that 2018 could be the year that GM breaks even in Europe.
“We’re going to do everything we can to drive it in that direction,” Steven said. He added that the only reason GM did not break even last year was due to the United Kingdom’s vote to leave the European Union.