General Motors profits dive, aims to reopen US plants May 18
General Motors said Wednesday it aims to reopen most US and Canadian manufacturing operations on May 18 as it reported a steep drop in first-quarter earnings due to the coronavirus.
The US auto giant reported that first-quarter earnings plunged 86 percent to $294 million on a 6.2 percent decline in revenues to $32.7 billion.
Global car sales fell by more than one-fifth during the quarter, with the biggest hit in China, where the coronavirus raged for much of the period.
Car sales also declined in the United States, although the impact was mitigated by gains in GM's full-size pickups.
Analysts expect a bigger hit to US sales in the second quarter. Many GM dealers are open for service and online car sales, but retail operations are skeletal in many cases.
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GM estimated the overall hit from the coronavirus in the first quarter at $1.4 billion.
Shares rose after the report, which topped analyst expectations.
Chief Financial Officer Dhivya Suryadevara said the company was seeing a "stronger recovery" in China, with much more retail traffic in April after the market bottomed out in February at the height of China's coronavirus outbreak.
In the US, some 800 additional dealers have launched GM's "Shop. Click. Drive." service, meaning that around 85 percent of the company's dealers now have the program.
Online sales jumped by 40 percent, Suryadevara said, but she acknowledged the second quarter "will be tough" during a briefing with reporters.
GM said it has a May 18 target to resume auto production under enhanced safety measures that it said exceed government guidelines.
Manufacturers have been upgrading their operations in the wake of Covid-19 to incorporate more social distancing by staggering work shifts. They have also deep-cleaned factories, installed extra sanitizing equipment, monitored employees' temperature for illness and required personal protective equipment.
The United Auto Workers has reacted cautiously to a plan by Fiat Chrysler announced prior to GM's statement Wednesday to also resume operations on May 18.
"We continue to advocate for as much testing as possible at the current time and eventually full-testing when available," UAW President Rory Gamble said Tuesday.
"As for the start date, the companies contractually make that decision and we all knew this day would come. Our UAW focus and role is and will continue to be on health and safety protocols to protect our members."
With the hit from shuttered production plants and lower car sales, GM has taken steps to retain cash and boost liquidity.
The company, which in April suspended its divided, ended the quarter with $33.4 billion in liquidity.
Shares jumped 7.6 percent to $22.85 in pre-market trading.