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Strong GM Guidance Boosts Auto Sector

STLA, GM, HMC, TM, TSLA | January 11, 2019

Auto stocks were mostly trading higher Friday morning after General Motors Company (NYSE: GM) surprised investors with an encouraging outlook that boosted its stock.

What Happened

General Motors said Friday ahead of its Capital Markets Day presentation that it expects 2018 earnings per share and free cash flow to come in ahead of prior guidance issued in late October. The company expects to earn between $6.50 and $7 per share in 2019, which implies earnings growth from 2018 figures.

General Motors also expects the overall U.S. auto market to "remain strong," with total industry sales coming in at the low 17-million range. In China, the company is projecting total car sales of nearly 27 million throughout 2019, which would be consistent with 2018 figures.

Focus On Electrification

GM said Cadillac will be its "lead electric vehicle brand," and the company expects to introduce the first model from its all-new battery electric vehicle architecture. The battery and other critical components will be designed "for maximum usability across all programs" and be "adjustable, based on vehicle and customer requirements."

Autonomous Update

GM's Cruise brand of autonomous vehicles is "progressing toward commercializing" self-driving cars in an urban environment in 2019, the company said. The AV initiatives are backed by more than 1,100 employees and $5 billion in external capital that's been raised since May 2018.

Price Action

Shares of General Motors were higher by 8.2 percent at the time of publication Friday.

Shares of Fiat Chrysler Automobiles NV (NYSE: FCAU) were higher by 1.62 percent.
Shares of Ford Motor Company (NYSE: F) were higher by 1.56 percent.
Shares of Honda Motor Co Ltd (NYSE: HMC) were up 0.7 percent.
Shares of Toyota Motor Corp (NYSE: TM) were up 0.49 percent.
Shares of Ferrari NV (NYSE: RACE) were up 0.13 percent.
Shares of Tesla Inc (NASDAQ: TSLA) were down 1.25 percent.