General Motors (NYSE:GM) Outlook Positive
General Motors (NYSE:GM) reported Tuesday an annual drop in US auto sales despite a strong fourth quarter that reflected a surprisingly robust recovery from the disruption of Covid-19.
The biggest US automaker cited continued consumer hunger for pickup trucks, sport utility vehicles and other large cars, enabling GM to score record average transaction prices in the fourth quarter and full year.
But overall sales for 2020 still fell 11.8 percent to 2.5 million compared with 2019, reflecting the hit from a nearly two-month disruption to auto manufacturing due to the initial US Covid-19 outbreak in the spring.
Since that time, GM and other auto giants have overhauled plants to respect social distancing protocols, enabling car output to return roughly to pre-Covid-19 levels.
In the fourth quarter, GM reported a 4.8 percent increase in US auto sales to 771,323, topping analyst estimates.
The auto giant also disclosed that inventories at the end of 2020 stood at about 33 percent below the year-ago levels, but offered an upbeat outlook for the year.
“We look forward to an inflection point for the US economy in the spring,” said GM Chief Economist Elaine Buckberg.
“Widening vaccination rates and warmer weather should enable consumers and businesses to return to a more normal range of activities, lifting the job market, consumer sentiment and auto demand.”
Despite elevated unemployment, US auto sales have been relatively strong in the second half of 2020.
Analysts have pointed to the lift from federal support programs to consumers, as well as the shifting of funds from travel and other discretionary items to autos and bigger-ticket purchases, such as home improvement.
Still, US auto sales for 2020 are projected to drop 15.3 percent to 14.4 million, according to Cox Automotive, in what would be lowest year since at least 2012.