General Motors said on Tuesday it expects earnings in 2018 to be largely flat compared with 2017, but that profits should pick up the pace in 2019 as its revamped line of high-margin pickup trucks hits the U.S. market.
The 2018 earnings outlook was above market expectations, sending GM shares up more than 3 percent in premarket trading.
“GM had a very good 2017 as we continued to transform our company to be more focused, resilient and profitable,” GM Chief Executive Mary Barra said in a statement. “We are positioned for another strong year in 2018 and an even better one in 2019.”
GM and its Detroit rivals, Ford Motor and Fiat Chrysler Automobiles, are bringing on new trucks at a time when overall U.S. new vehicle sales have been falling, but truck sales continue to grow as consumers abandon passenger cars in favor of pickups, SUVs, and crossovers.
GM on Saturday fired a new round in the battle for profits from one of the U.S. auto industry’s most lucrative segments when it showed a new generation of its Chevrolet Silverado pickup truck at the Detroit auto show.
The new Silverado, a highlight of the event, is the successor to GM’s best-selling vehicle in North America. Sales of the current Silverado rose nearly 2 percent to 585,000 vehicles in 2017.
In the coming months, the company will also reveal a revamped GMC Sierra pickup truck.
U.S. new vehicle sales fell 2 percent in 2017 after hitting a record high in 2016, and are expected to drop further in 2018 as interest rates rise and more late-model used cars return to dealer lots to compete with new ones.
GM said on Tuesday that while it retools a factory in Ft. Wayne, Indiana, to make the new pickup trucks, it will shift some production to an Oshawa, Ontario, plant in order to avoid missing sales in a hot market for the vehicles.
The No. 1 U.S. automaker said it will record a $7 billion non-cash charge for its fourth-quarter 2017 earnings related to deferred tax assets.
GM said it expects capital expenditure in 2018 of around $8.5 billion, about $1 billion of which will go towards funding self-driving car technology.
Last week, the company said it is seeking U.S. government approval for a fully autonomous car – one without a steering wheel, brake pedal or accelerator pedal – to enter the automaker’s first commercial ride-sharing fleet in 2019.
GM said it expects 2017 earnings per share at the high end of its previously forecast range of $6 to $6.50. Analysts have predicted full-year 2017 earnings per share of $6.30.
The company expects earnings for 2018 to be roughly the same as in 2017. Analysts have predicted full-year 2018 earnings per share of $5.98.
In premarket trading, GM shares were up $1.35, more than 3 percent, at $45.42.