GM CFO Dhivya Suryadevara said strong sales in China helped the company beat analysts expectations for the second quarter.

General Motors was able to circle the wagons and beat back the full brunt of the coronavirus pandemic during the second quarter, solidly outperforming the gloomy outlook forecast by Wall Street.

With factories shuttered for two months and sales sagging to Great Recession levels, GM lost $800 million for the quarter, working out to a loss of 50 cents a share. But the consensus forecast among analysts surveyed by Zacks Investment Research called for a deficit of $1.72 a share. By comparison, the largest of the Detroit automakers reported a $2.42 billion profit, with earnings per share of $1.64, during the April-June quarter of 2019.

“This demonstrated the actions we’ve taken over the last few years to be more resilient to reduce our fixed costs, and to lower our breakeven point and really improve our earnings power so we can invest in our future,” said Chief Financial Officer Dhivya Suryadevara in a media conference call.

(GM speeding up plans for battery-powered cars and wind- and solar-powered plants.)

The relatively modest loss for the quarter was all the more significant considering revenues for the three months tumbled more than 53%, to $16.78 billion, compared with $36.1 billion the year earlier.

GM’s sales in China bailed the company out during the second quarter as the country was the first hit by the pandemic and is now in full recovery mode.

The downturn might have been even worse but for the fact that the market in China – where the coronavirus pandemic first emerged – was hit hardest during the first few months of the year and was already beginning to recover by the second quarter, noted Suryadevara.

Meanwhile, GM was able to cut spending and take other actions in order to keep its deficit in the home North American market to a relatively modest $100 million, the CFO told reporters Wednesday morning.

Nonetheless, the pandemic has had a significant impact on the Detroit carmaker, forcing it to take aggressive actions to prop up its balance sheet, among other things, lining up a $16 billion revolving line of credit as it burned through $8 billion in cash for the quarter.

Suryadevara offered a cautious bit of “color” for the second half of the year, declining to offer specific guidance at a time when the COVID-19 outbreak is still far from under control. But she said she expects GM will be able to “offset a large portion of the first half (cash) burn,” and pay down most or all of what it borrowed from the revolving credit line.

(GM cutting third shift at midsize truck plant.)

GM’s relatively solid performance can be seen in light of what Wall Street had been anticipating. This was, for GM, likely to be “the toughest (quarter) in modern history,” said Bank of America Merrill Lynch analyst John Murphy, ahead of the automaker’s earnings release.

The company is slowly rebuilding its inventory for the Silverado, but with so many variants, choices could still be limited for some time.

Competitors are just beginning to weigh in with their results. In Japan, Mitsubishi fell deep into the red, as did Nissan, the larger automaker on Tuesday warning it expected to lose a total of $4.5 billion for the fiscal year ending next March. Tesla earlier this month delivered a surprise profit for the second quarter. That was partially driven by sales in China where it opened a new assembly plant late in 2019, but was also fueled by ongoing sales of zero-emissions credits to other automakers.

The industry, as a whole, is in an uncertain period, with no clear end to the pandemic in sight. GM has been able to keep its factories running by enacting strict guidelines to minimize the risk of infection among workers. Even so, it is only slowly rebuilding inventories sorely depleted during the two-month North American factory shutdown that began in March.

That’s been particularly problematic when it comes to the full-size pickups and the SUVs that helped prop up the automaker during the most recent quarter. GM has “recovered a portion of” its inventory, and is “slowly building this back up,” said Suryadevara, though it is not likely to be back to normal levels of inventory in North America, she said, until the end of the year.

The steps GM took to prop up its balance sheet during Q2 will be particularly important going into the second half of the year, she added, noting that the company is moving aggressively ahead with both its battery-electric vehicle and autonomous vehicle programs. The automaker plans to have more than 20 BEVs in production by 2023, a schedule it says it intends to hold to. The next long-range model in its line-up to take a bow is the Cadillac Lyriq which will be unveiled during an online event on Aug. 6.

(GM suffers big drop in second-quarter sales.)

What actually happens in the months ahead is far from certain and could depend on whether there is a second wave of the COVID-19 pandemic. Global car sales are expected to be down by 20%, even under the best-case scenario, according to LMC Automotive. Meanwhile, industry analysts generally expect U.S. sales to come in somewhere between 13 million and 14 million – down from 17.1 million in 2019 — though that could dip as low as 12 million, J.D. Power and others have warned, if the crisis forces new rounds of shelter-in-place orders, factory closures and other hits to the economy.

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