General Electric at Electrical Products Group Conference Notes

Jeffrey Immelt – Chairman and CEO

Look, nobody like how the stock has traded this year

” Look, nobody likes how the stocks traded so far this year, but it’s up to us to execute and that’s what we’re committed to doing. This is the world, I think you’ve heard this week kind of the business outside the U.S. is quite strong. U.S. gets a little better each day, still the ability to get defilation we see in our markets.”

Oil and gas stabilized but off a low base

” I would say the oil and gas market stabilized. We see orders improving, but it’s off a low base. So I still think we have to underwrite caution in that space.”

New portfolio is power, healthcare, transport and resources

“So look we’ve done a ton of work around the portfolio. I would make a couple points here. We are big and what I recall four big equal systems. We’re big in power, healthcare, transport, resources, we’ve got leadership positions, diversified positions across all those. We’ve really try to I’d say narrow the scope of the company. We’ve launched a couple of things that I think are going to give us bigger pools from a profitability standpoint.”

We have divested $100 billion worth of businesses

“What I would say to you guys is look I know this is about unlocking value versus creating value and all that shit really. But really it’s just hard for us to say really and I have come down here a long time we divested more than $100 billion worth of businesses, right. We did plastics and NBC, insurance and capital. And did we get them all right, maybe not, but we got more right than wrong. And so what I would say Rob, look we’re always going to be fast on our feet and trying to create shareholder value and if we are not good at a business, we are going to sell it.”

General Motors at Citi Conference Notes

Michael Abelson – VP, Global Strategy

Winning in autonomous is going to take scale

“Then the last piece that we’re working on is clearly autonomous. And when we looked at autonomous, we decided that we wanted to supplement our internal resources. So about a year ago we acquired Cruise Automation, a Silicon Valley startup that had been working on autonomous vehicles, and that has gone really well. The Silicon Valley guys bring a set of skills around software and development speed that’s very different from our traditional approach in Detroit. At the same time, we in the core company, we bring to bear our hardware expertise, our engineering expertise, and very importantly, our manufacturing expertise and how do we scale this, because importantly everybody talks about autonomous demo projects, but winning in this space really is getting to scale. It’s not doing demo projects. And so it’s a very big step to go from a demo project to really producing vehicles at scale.”

You’ve got to have the manufacturing know how

“So yes. As we think about it, you’ve got to bring several capabilities to be able to put an autonomous ride sharing vehicle in the field. Certainly one of them is just the basic autonomous technology. You’ve got to be able to develop the system, have it drive safely. You’ve got to then understand what does it mean to deploy these vehicles into a sharing economy? And I would argue between the work we’ve done internally on Maven, as well as the conversations we’ve had with Lyft, we feel like we’re in a good position there. But then I go back to something that sometimes I think people underestimate. You’ve got to be able to make these vehicles at scale and you’ve got to have the manufacturing know how to put thousands and tens of thousands of vehicles out in the field.”

General Motors 1Q17 Earnings Call Notes

Mary Teresa Barra – General Motors Co.

Cruise gives us access to world class talent

“We are running our autonomous vehicle program like a startup to give us the speed that we need to stay focused at the forefront of these technologies and the market applications. As autonomous car technology matures, our talent needs will increase, and Cruise’s presence in the Bay Area gives us access to a world-class talent pool. These are men and women who want to be part of a fast-moving technology company that can also manufacture autonomous vehicles in scale.”

Chuck Stevens

Inventory remains heavy

“Shifting to inventory, as I said during the January DB conference and in our recent Office Hours webcast, we expect to build inventory in the first half of the year, which will then decline in the second half, very much driven by product launch cadence and scheduled K2XX downtime. And through the first trimester of the year, we are very much on plan.

Admittedly, passenger car inventory remains heavy and we have been working to bring that down to more appropriate levels by cutting production, and we remain committed to match supply and demand. We expect to end 2017 with inventory in line with 2016 at about 70 days’ supply, with significantly reduced passenger car levels.”

GM at Deutsche Bank Conference Notes

Mary Barra – Chairman and CEO

80% of our total vehicles are produced in the US

“Well, first off I think what we want to do is make sure as all the different policy changes are being contemplated. People really understand the auto industry, understand that we are long lead, decisions of products that we are launching right now were made two, three, four years ago. Also that it’s a very capital intensive business. And we think as people understand that but also understand right now in General Motors we have over 40 manufacturing facilities in the United States. We provide 100,000 jobs. Over the last two years we’ve invested $11 billion in the United States. We’ve also which is either preserved jobs or increased jobs from a IT perspective over the last few years we’ve increased 11 or broaden 11,000 IT jobs into this country, many of which brought into the company many of which were brought into the country as we made that move, as well as we made some shifts in our engineering foot print. So we want to make sure people understand the industry and General Motors specifically as we look at that. When you also then look at where we produce, we produce upwards of — over three quarters almost 80% of the total vehicles produced in the US when you look at it against sales. So we are providing very strong job. And when you look at for instance some of the products that we talked about, there comes a point where if you have to look at how officially how many vehicles are you going to sell to make the investment worthwhile, that’s when some cases products are in Mexico because of the bilateral trade agreements. So that’s another important point that we want to make as we look at what are the difference that are going to be made in trade.”

Chuck Stevens

See another strong year but a plateau

“Relative to the growth rate now Dan or Mary can way in, we expect to see another strong year in 2017 from a US industry perspective. We had another record year in 2016. We think we are going to plateau at these kinds of strong levels. I think the fundamental drivers of what’s been driving the industry may change a little bit from a kind of credit driven tailwind into more of economic growth GDP type growth tailwind over the next number of years. Is there upside to the industry? Perhaps but we try to manage the business from a conservative perspective from a revenue standpoint then see if we can take advantage of those opportunities as they present themselves.”

General Motors 3Q16 Earnings Call Notes

General Motors (GM) Q3 2016 Results

We recognize that the industry is increasingly competitive

“However, given the recent increased interest in industry incentive and inventory levels, I’d like to spend a few additional minutes to share our view. Cleary, we recognize the industry is increasingly competitive, especially as consumer preferences are shifting away from sedans and more towards SUVs and trucks. We’ve remained absolutely committed to our disciplined retail-focused go-to-market strategy, and we have demonstrated that by managing supply and demand, and through disciplined pricing.”

Making progress with autonomous

“Sure. We are making great progress on the autonomous development. As I mentioned, we have a fleet now running, not only in San Francisco, but also in Scottsdale, so 30 vehicles on the road. And that’s important because it’s not just the miles, but it’s really the experiences and the scenarios that they continue to learn every day and I’m very pleased with the team’s performance.”

Autonomous will begin with ride sharing because it can be geo-fenced

“As we look at launching autonomous into the marketplace, we believe it will first happen in a controlled environment, in a ride-sharing environment, hence the alliance that we did with Lyft, as well as the work that we’re doing with Maven. But as we see it going into ride sharing, that’s because it will be geo-fenced, you’re going to have limitations with speed and other limitations, and that’s why the ownership will stay with the company in these first models as we continue to learn.”

Safety is top concern

“And so, that path is very much on track, but I will say what is going to gate our launching of autonomous vehicles into the marketplace for consumers is safety. And we are working very hard with the experience that we have to do that in the safest manner possible because it does then really address the issues that we have of over 90% of fatalities in today – in today’s U.S. streets are human error. ”

China is going to lead in the penetration of electric vehicles

” we believe that China is going to lead in the penetration of electric vehicles into the market, and that’s why we’ve announced that we have 10 new energy vehicles coming out. I would say we’re also the only OEM that actually manufactures batteries in-country right now. Clearly, we have the strength of the products that we have available to sell globally, with the second generation Volt as well as the Bolt EV and the Ampera-e, along with many other electrified products in China.”

Charles K. Stevens – General Motors Co.

Industry in China running stronger because a purchase tax incentive, but that could go away next year

“Obviously, this year the industry is running stronger than we expected, because of some uncertainty around the purchase tax incentive, if that was to end and the government was to announce an end to that, our planning assumption would be that – there could be some volatility in maybe the first quarter and second quarter of next year, but then we would still expect the industry to continue on that growth path towards 30 million units and as we’ve talked before, a little bit more volatile growth pattern and in the kind of low single digit range over the next number of years, again it really depends on what’s announced from the government’s perspective, we have no insight on that”

Truck buyers are the most loyal of any customer

“truck buyers are the most loyal of any customer. The loyalty rates of truck buyers are north of 60% and generally you are in the 50% range, so that’s first, you are dealing with that aspect.”

GM at Citi Conference Notes

General Motors’ (GM) Management Presents at Citi 2016 Global

Pam Fletcher

Range of electric vehicles means that many would seriously consider replacing conventional vehicle

“We saw this as a replicate to break the code on electric vehicles. Certainly long range affordability functionality performance and connectivity. In particular, when it comes to range, we know that consumer’s consideration of electric vehicle goes up substantially at 150 miles of range and goes up very significantly at 200 plus miles of range. So at this point many would seriously consider replacing their conventional vehicles with an electric vehicle. Affordability, we set the price target at $30,000 after the incentives to be on par with many internal combustion engine equipped vehiclesthat would be the point to really take each in that market.”

Electric and ridesharing

“So, not only are we expanding our products portfolio but also expanding our business models and the way that we interact with our customers, one way is through ride sharing, so initiatives where the car comes to you, you don’t have to drive if you don’t want to, ride sharing is one example of changing the economic efficiency of transportations on assets that’s going apply to you not only privately owned assets but commercially owned assets, of course this is all enabled through connectivity.”

Manufacturer of automated driving system is at fault in an accident

“Yes, so in cases where there is an automated driving system on the car, that system we see as being designated as the driver and if there is an incident where the driver is deemed to be at fault then the manufacturer of that automated driving system that would be their responsibility.”

Ride sharing is right forum for roll out of AV

” we think the right answer for deployment of autonomous vehicles is in a ride shared network. We think this provides a great opportunity to have a very orderly roll out. It gives an opportunity for consumers to experience the vehicle without a commitment for purchase we think it gives a chance to our consumers to get all their questions answered and experience the cars and so we’re really excited to get that moving, we have got some cars on the road today and we don’t see that being in the distant future by any means. Much near-term than I think envisioned. At the same time the other part of your question was you talk about the deployment of ride sharing.”

General Motors (GM) Q2 Earnings Call

General Motors (GM) CEO Marry Barra announced record earnings 

“I am extremely pleased to report that GM delivered strong earnings in the quarter that included record EBIT-adjusted and EBIT-adjusted margins in North America, record sales and strong margins in China, profitability in Europe, and records for net revenue, EBIT-adjusted, EBIT-adjusted margins, earnings per share diluted-adjusted and return on invested capital.”

Gains were broad based

“Net income increased over 150% to $2.9 billion as revenue rose 11% to $42.4 billion. EBIT-adjusted was up 37% to $3.9 billion. EBIT-adjusted margin was 9.3%, up from 7.5%. Earnings per share diluted-adjusted was $1.86, up from $1.29. Automotive adjusted free cash flow was $3.2 billion, and we had a record ROIC of 30.5% on a trailing four-quarter basis, and this continues to demonstrate the positive impact of our disciplined capital allocation framework.”

Best light truck sales in nearly a decade

“As I mentioned, our strong quarter was underpinned by outstanding performances in North America, China and Europe, so let me just touch on those briefly. In North America we gained 0.4 percentage points of retail share in the U.S. in the first half of the year. This is the highest of any full line manufacturer and I think it really indicates that our focus on more profitable sales is working. We had the best Q2 light truck retail sales in nine years and the best mid-size retail pickup sales in 11 years.”

European operations are rebounding

“In Europe, the team posted its first profitable quarter since the second quarter of 2011. It was a great team effort across every single aspect of the business. Opel and Vauxhall outperformed the industry with a 7% year-over-year sales increase to 621,000 vehicles in the first half of this year.”

Their South American operations were the weakest region geographically

“as you all know, macroeconomic conditions in South America and many parts of our international operations continue to be challenging. The team continues to work to offset these pressures, and we will continue to take the necessary steps to set up these regions for future success. A proof point is South America. In the first half of 2016, we narrowed losses by $170 million, despite a much more challenging economic environment fundamentally in Brazil.”

General Motors (GM) CFO Chuck Stevens said North American industry wide car sales are up slightly from last year

“And fundamentally supporting our business is the U.S. light vehicle industry that is tracking in the low-to-mid 17 million SAAR range year-to-date, up 1.2% compared to the same period last year.  We continue to believe the industry will remain strong.”

General Motors (GM) CEO Marry Barra on automotive plant capacity expansion and product pricing discipline

“Relative to industry capacity, pricing, and everything else, as you look over the last number of years and just track incentive spend as a percent of transaction prices, it’s inched up a little bit as we look at the trend over the last number of years. Nothing alarming. It appears that, from our perspective, the industry has continued to be rational from that perspective. Our base case is that’s going to continue. As a matter of fact, one of your colleagues just wrote a research report that would indicate that the OEMs are displaying a lot of incentive discipline, and that could ultimately have a bit of a headwind from an overall SAAR perspective going forward. We continue to see overall discipline. We’re certainly going to remain disciplined. We’re certainly going to continue to focus on capacity utilization. Hence, our focus on profitable retail growth versus fleet.”

General Motors (GM) CEO Marry Barra on why they bought technology startup Cruise Automation for $581 million

“Well, from a technology perspective, as we look at autonomous, Cruise Automation is the company that we have been following for a couple of years now. And as we saw the progress, and a very specific technology from a – call it machine learning or artificial intelligence, that coupled with all the work we were doing, we felt it accelerated our ability to be first or among the leaders as we implement fully autonomous technology into vehicles. And so it was very specific. It was something we’d been watching for quite a period of time. And strategically, we thought it was appropriate and we did a complete make/buy analysis but we thought the work that we had observing would integrate very well and accelerate our efforts.”

 

General Motors (GM) President Dan Ammann and Lyft CEO John Zimmer Interview

GM President Dan Ammann says customer preference of their product is evolving

“In the last year or two, we’ve started to see a fundamental change in the behavior of our customers and the way they want to consume car based transportation.  That is why we formed the alliance earlier this year with Lyft to get ahead of those changes.  We think ride sharing is interesting.  We think autonomous driving is interesting.  But where it gets really interesting is when you put these 2 changes together.”

Lyft CEO John Zimmer on why he decided to partner with GM

“GM is the largest car manufacturer in the United States.  We always think about treating our drivers better than any other company, it’s a big reason we’ve doubled our market share in the last year.  And what that means is when drivers have an option to go get a car on lease from another company, we said what is the best possible scenario for the driver?  It would be getting vehicles from the source, it would be charging the lowest rates, and it would be making it completely flexible.  And we wouldn’t be able to do that without a partner like GM.”

 

 

 

Source: Fortune Interview July 11, 2016 https://www.youtube.com/watch?v=WyiTiGmRpFg

General Motors Q1 2016 Earnings Call

GM CEO Marry Barra called out the strength of their Buick brand in China

“If we move to China with our joint venture partners, we delivered over 963,000 vehicles, up slightly from Q1 2015, thanks to the growth in SUV and the luxury segment. The Buick Envision sales more than doubled and when we include the Baojun 560, total SUV sales jumped 148%. We’re also very excited about the new Buick LaCrosse sedan that was introduced, that can continue to build on the strength of Buick in China.”

Getting into the car sharing business

“Maven City offers cars on demand in key cities driven by on OnStar-powered smartphone connectivity that really provides the customers an ownership-like experience. And Maven+ is a completely dedicated private fleet for residential community. We started this in New York City, as I’ve talked about it in the past. We’re going to soon be adding Chicago and this will give us the potential to reach more than 5,000 residents.”

GM CEO Marry Barra defended the $1 billion dollar acquisition of autonomous driving startup Cruise Automation 

“And when you look at the specific technologies that are necessary, which there are many and there’s still, I will say, critical development on the mainline, the expertise and the work that’s already been done by Cruise, we saw as something that would really accelerate our ability to lead from an autonomous perspective.  And I think from a shareholder perspective, we are always looking at ways that we can lead and get there more quickly and make the decision of do we partner, do we buy or do we develop internally. And as we looked at the capability, we clearly thought, and our vision of the future again of where Cruise was headed, we were very much aligned similar to the way we were with Lyft and we saw this as a huge opportunity to really accelerate our performance in autonomous.”

GM CFO Chuck Stevens expects used car pricing to moderate 

“Used car pricing has been at all-time highs over the most recent couple of years and from a planning perspective, we expect moderation in used car pricing. That’s built into both the auto company as well as GMF’s expectations, and we’re seeing that play out kind of as we expected. So, no material exposures, no material risk and as I said, as we anticipated a moderation in used car pricing is built into our baseline plan.”

GM CFO Chuck Stevens said the company’s truck business has never been stronger

“We had just under 38% retail share in the first quarter. We continue to lead in the industry, we just launched a refreshed truck, which will carry us to the next generation truck, and we feel very confident that we’ll be able to protect those pools, because we’ve got great products.”

GM CEO Marry Barra dismissed the idea of launching a new standalone brand focused solely on electronic vehicles 

“But when you look at it, first of all, we have two global brands, Chevrolet and Cadillac, and there is also pure EV like we have with the Bolt EV that will be coming out later this year, we have extended range electric vehicles with the Chevrolet Volt. But then we also have a lot of electrification, the Malibu Hybrid and we’ll be launching over 10 new electrified vehicles in China. So to us really the electrification is something that we integrated in the portfolio that allows us to build not only our capability and spread it broadly and reach more customers, but also to build those brands so they’re viewed appropriately as technology leaders. And I think we continue to do that, so we see it as core and integrated.”

Pricing pressure in China remains a challenge 

“Nothing has changed vis-à-vis the China fundamentals versus what we’ve been talking about for the last year or so. Fundamentally price continues to be a challenge. Last year it was in the range of 4% to 5% negative price headwinds. On carryover, we expect that same level this year. That’s what we’ve seen play out so far in the first quarter. And we’re offsetting that impact through improved, significantly improved mix and you saw some of those results. The Envision as an SUV, sales up significantly; the Baojun, 560, we’re launching critical new products like the Cadillac CT6 and Cadillac XT5. So mix has been a mitigant to the price headwinds, as well as carryover material performance and kind of when I look at those two together, they kind of offset the price headwinds and where you see the benefit, at least on an aggregate equity income or profit perspective is volume.”

General Motors at Deustche Bank Conference Notes

Mary T. Barra

Onstar helps give us some advantage in autonomous

“if you just look at the crowdsourcing work that we’re going to be doing with MobileI, I think it really leverages the fact that we’ve got all these vehicles that have OnStar. So we’ve got the connectivity because as we all know when you look at autonomous, one of the key is having accurate road information and surrounding information and it’s ever changing. So it’s not just get everything mapped once you got to constantly be updated. So when you think about our fleet in our car park that’s got OnStar that has the ability to upload that information for it to be processed working with MobileI I think that is a huge opportunity that our scale and our existing car park with the embedded connectivity that we’ve had for quite some time enables.”

Dan Ammann

Clearly there’s a lot of concern about the auto cycle maturing

“So just a quick opening comment on the macro-environment, I think clearly there’s a lot of concern in this room and around the investment community in general, but the automotive cycle is maturing and if you look just simply at the volume numbers coming out of 2009 for the global industry you see exactly that picture where the growth rate was initially pretty rapid, coming out of the trope and has begun to moderate going forward.”

As growth is decelerating we need to make shifts in the way we’re allocating resources

“when you get into an environment where it’s becoming arguably more challenging from a macro perspective decelerating growth. You couple that with fundamental change going on in your business, you get back to the central issue of how and where are we allocating our resources. And the usual momentum strategy no longer applies, so we need to bring a fundamentally different wins to the business and how we’re doing this.’

We believe that the first scale deployment of autonomous vehicles will be into this ride share business model

“as we engaged with people around the industry and in particular as we engaged with the team from Lyft we found we had this very common view that the first scale deployment of autonomous vehicles will not be selling them to individual consumers, but it will be into this ride share business model and there’s lots of reasons why that’s the case from safety and regulatory to the fundamental economics of taking an expensive new technology and deploying it into a high utilization model into the technical constraints in the early stages of this, which will lend themselves much more to an owned fleet in a controlled operating environment.”

We see a very clear convergence between autonomous and ride share

“So for all of those reasons we see a very clear convergence between autonomous on the one hand and ride share on the other and that’s what’s total unique about the partnership and alliance that we have put together with Lyft is the first time we have a major scale ride share platform combining with a scale car making platform and all of the technical capability in and around that from an autonomous perspective.”

Chuck Stevens

Pricing in the US has been reasonably rational

“pricing in the U.S. continues to be reasonably rational and you guys have accessed to the same data we do. Incentive spend as a percentage of transaction price went up a bit in 2015, but still overall very, very rational and we would expect that to continue. With that said one other reason we’re still focused on driving cost efficiency is we control cost, we don’t always control what happens in the market and again we would as a baseline assumption would expect continued rationality in the market at least in 2016.”

Commodities should be a tailwind in 16 again though not as large as ’15

“Commodities I’ve talked before about 2015 as a developed it was a several hundred million dollar tailwind force in ‘15 versus ‘14. I would expect kind of more of the same in ‘16 versus ‘15, it’s not $1 billion or $1.5 billion, but certainly several hundred million dollars of tailwinds at least not as things are developing right now and that’s factored into our outlook for sure.’