General Motors and Ford's Upcoming Earnings Reports

By Nathan Gomes and Nora Eckert

(Reuters) – General Motors (NYSE:GM) and Ford Motor (NYSE:F) are facing challenges in convincing investors about their pricing power for gasoline cars and decreasing losses from electric vehicle (EV) ventures as they prepare to report their quarterly results.

Upcoming Earnings Reports

• GM: Results for the July to September period due on Oct. 22.
• Ford: Results on Oct. 28.

GM's CEO, Mary Barra, stated earlier this month that profit margins on traditional gas-powered vehicles have not peaked and that EV sales are on the rise. GM's shares have surged by over a third this year, following two upward adjustments to their annual profit forecast, largely due to strong gas-powered sales.

Conversely, Ford has struggled with quality issues and significant EV losses, causing an 8% drop in their shares this year. Analysts from Deutsche Bank predict Ford may fall short of expectations, particularly due to excessive inventory concerns during the quarter.

Economic Impact and Consumer Behavior

Wall Street remains skeptical about consumer willingness to pay high prices for trucks and SUVs amidst rising interest rates and economic uncertainties. Cox Automotive reports that the average listing price for new vehicles rose by 2% month-on-month in October, reaching $47,823, indicating a stabilization in prices.

Deutsche Bank Research mentioned concerns about peak pricing and the impact of the upcoming November election on EV policies.

Both GM and Ford are shifting focus towards producing higher-margin gasoline models such as Ford’s Maverick pickup and GM’s Chevrolet Trax compact SUV as EV sales growth has decelerated. Ford even canceled its upcoming electric SUV due to profitability concerns, while GM has scaled back its EV production goals.

The Detroit automakers have gained market share from competitor Stellantis (NYSE:STLA), which is struggling in North America. Analysts will be looking for insights into consumer behavior amid economic challenges.

Cox Automotive’s Chief Economist Jonathan Smoke noted that despite a recent Fed rate cut, improvements in auto loan rates and vehicle affordability remain limited.

U.S. automakers’ third-quarter sales data shows a consumer shift towards economical compact crossovers due to lower maintenance costs and better fuel efficiency.

The Numbers

GM:

• Q3 revenue expected to grow about 1% to $44.5 billion.
• Estimated earnings per share (EPS): $2.46.

FORD:

• Q3 revenue expected to grow about 2% to $42 billion.
• Estimated earnings per share (EPS): $0.48.