How General Motors Generates Revenue in the Modern Era

Core revenue streams for GM revolve around vehicle sales and financial services.

General Motors (GM) stands as a global leader in automobile and truck manufacturing. While continuing to produce traditional vehicles under brands like Buick, GM also operates extensively in China through joint ventures. The bulk of GM's income comes from vehicle sales alongside its financial subsidiary, GM Financial.

Currently, GM is undergoing a significant transformation, transitioning from internal combustion engines to electric vehicles (EVs). This article delves into GM's revenue sources, profitability, and future direction.

Key Insights

• GM produces vehicles under multiple renowned brands including Chevrolet, Buick, GMC, Cadillac, and two Chinese brands.
• In 2020, GM delivered over 6.8 million vehicles worldwide, with more than 2.5 million sold in the U.S.
• The company reported $122.5 billion in revenue and $6.4 billion in net income for 2020.
• For the first nine months of 2021, GM achieved $93 billion in revenue and $8.3 billion in net income.
• GM is aggressively investing in electric vehicle technology and production.
• In mid-2021, GM committed $35 billion toward EV investments through 2025.

About General Motors (GM)

Founded in 1908 by William C. Durant, GM employs approximately 155,000 people globally, including over 88,000 in the United States. The company’s headquarters is located in Detroit, Michigan.

GM operates 122 manufacturing plants and facilities across the U.S., including 11 assembly plants, 19 parts distribution centers, and battery manufacturing sites. Its global manufacturing footprint spans six continents.

GM’s Brand Portfolio

GM manufactures vehicles under several iconic brands such as Chevrolet, Buick, GMC, and Cadillac.

In China, GM produces vehicles under the Wuling and Baojun brands and maintains ten joint ventures. Additionally, GM operates through joint ventures in India, Egypt, and South Africa.

Subsidiaries and Services

GM owns OnStar Corp., a subsidiary offering in-vehicle communication, security, hands-free calling, navigation, and remote diagnostics via subscription services.

OnStar features include crash detection with automatic emergency response, stolen vehicle tracking, and in-car Wi-Fi hotspots, enhancing driver safety and connectivity.

Industry Position

GM is recognized as one of the "Big Three" U.S. automakers, alongside Ford and Stellantis. GM Financial, a wholly owned subsidiary based in Fort Worth, Texas, provides auto financing solutions across North and Latin America, and holds a 35% stake in a Chinese automotive finance joint venture.

Sales Performance and Profitability

The COVID-19 pandemic in 2020 caused manufacturing interruptions and sales challenges. However, GM adapted quickly, showing robust financial recovery in 2021.

In 2021’s first nine months, GM’s net income rose to $8.3 billion, more than doubling the $3.6 billion earned in the same period of 2020.

Vehicle Sales Highlights

GM delivered over 6.8 million vehicles globally in 2020, including 2.5 million in the U.S. Despite pandemic setbacks, Q4 2020 retail sales hit 771,323 units, marking the best fourth-quarter performance since 2007.

Compared to Q4 2019, total sales rose 5% and deliveries increased by 12%, though overall 2020 deliveries declined 12% due to the pandemic.

Sales for the first nine months of 2021 grew 9.9% year-over-year.

• GMC Sierra experienced a 14% increase in Q4 retail sales and a 9% rise for the full year.
• Five GMC models showed double-digit growth, including Yukon (41%), Canyon (42%), Sierra (14%), and Acadia (26%).
• Chevrolet retail deliveries increased 12%, with significant growth in Corvette (158%), Bolt EV (106%), Tahoe (78%), and Suburban (56%).

In China, GM sold 2.9 million vehicles in 2020, with Wuling leading growth at 8.8%, surpassing 1 million units sold. Buick and Cadillac deliveries increased by 4.1% and 7.9%, respectively.

Average transaction prices reached record highs of $41,886 in Q4 and $39,229 for the full year.

"GM outperformed the industry significantly due to strong manufacturing, supply chain resilience, and dealer efforts," said Steve Carlisle, GM Executive Vice President and President of GM North America.

Q3 2021 Sales Overview

Though many brands faced sales declines in the first nine months of 2021 due to pandemic impacts, Chevrolet trucks (+1.5%), Cadillac (+10.3%), Buick (+26.9%), and GMC (+7.9%) grew in North America. In Asia-Pacific, Middle East, and Africa, Wuling (+41%), Buick (+3.5%), and Cadillac (+21.3%) saw sales increases.

"Our Q3 2021 results demonstrate the resilience of our core business supporting future growth," stated GM CEO Mary Barra.

Financial Drivers

In 2020, GM reported $122.5 billion in revenue with $6.4 billion net income. The first nine months of 2021 saw net income rise to $8.3 billion.

The company’s 2020 and 2021 financial reports highlight strong regional performance, with EBIT (earnings before interest and taxes) serving as a key profitability indicator.

GM’s Vision for Electric Vehicles

In August 2021, GM revealed plans for 40% to 50% of its U.S. sales to be electric vehicles by 2030, encompassing battery-electric, fuel-cell, and plug-in hybrids. This aligns with GM’s commitment to zero-emission light-duty vehicles.

GM pledged $35 billion in EV investments through 2025, including building two new battery plants in the U.S., accelerating its earlier $20 billion commitment made in 2020.

The company aims to lead the North American EV market and become a global pioneer in battery and fuel cell technologies, alongside pioneering safe commercialization of self-driving vehicles.

"We are targeting over one million annual global EV sales by 2025 and are scaling investments to meet rising U.S. demand," said GM Chair and CEO Mary Barra.

Profitability Snapshot

As of Q3 2021, GM reported a quarterly profit of $2.4 billion, contributing to a $8.3 billion profit over the first nine months.

Locating GM’s Net Profit

Net profit figures are available in GM’s latest annual or quarterly financial reports, accessible on their official website under the net income section.

Government Support During Crisis

During the financial crisis, GM received $52 billion in government assistance, including a $6.7 billion loan.

Conclusion

With a century-long legacy, GM remains a dominant force in the automotive industry. Its ambitious pivot toward electric vehicles represents both a challenge and opportunity, aiming to replace traditional vehicle revenue streams with EV sales.

This transformation demands significant investment and competition with emerging EV manufacturers but positions GM to lead the future of mobility.

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