Ca$htag$: GM Finds Its Lane as SUV Demand Surges and EV Interest Fades

Diane King-Hall (0:01)

Welcome back to Fast Market, here on the Schwab Network. I'm Diane King-Hall, alongside Kevin Hanks over at the CBO. Time now for our Cash Tag segment. For that, let's bring in our next guest, and that is Andy Swan, co-founder of LikeFolio, with new sentiment data on General Motors, ahead of its quarterly results. Andy, good to see you, good to kick off the week with you. So, let's get right into it. What sentiment looks like for GM?

Kevin Hanks (0:21)

What is your latest data?

Diane King-Hall (0:22)

Show us. Yeah, happy Monday. For GM, our data's turning positive for the first time in several quarters, really led by some of the mid-size and smaller SUVs, the Chevy Trailblazer, Buick and Vista, etc.

We see consumer demand for those vehicles really picking up here. They have really tough comps on the EV side because the tax credits last year, expiring brought in a huge surge of people who were on the fence about EVs, got them over the finish line, now that demand has really dried up. So when we look at General Motors and we look at the aggregate of people searching for GM products or stating on X or other places that they're going to buy a GM product, the shift from Q2 to Q3 is really extraordinary. It's very negative in Q2 on a year-over-year basis, and then in Q3 turned positive for the first time in a very long time. In fact, the biggest swing of any automaker. So as we head into this, we think GM has some light at the end of the tunnel. We think that they're starting to get traction on specific models that really flow through to the bottom line. So things are looking a lot better for GM than they were simply a couple of quarters ago.

Kevin Hanks (1:49)

You know, Andy, when you look at the history of this company, 43 brands, they've gone through over their years.

When they were at their peak, like, you know, in the early 2010s, before they went bankrupt, it was, you know, Chevrolet, of course, still there, Pontiac, the Firebird, everyone remembers that car, the Pontiac Grand Prix, one of my all-time favorites. Then it was Oldsmobile, they got rid of that in 2004, they closed, still have Buick, still have Cadillac, down to four key brands, and of course, GMC trucks. But I mean, who doesn't remember? The Saturn, the Saab Turbo, the Hummer, all those trucks, all that they've gotten through, and the meaning of this little story I'm telling here is, they are lean now, they're down to four brands and GMC trucks, and they've got this figured out. I think one of the reasons they're gonna make more money this quarter is less losses from EVs than normal. If they can get those margins over 8% and towards 9%, this company is still relatively inexpensive despite a nice run that it's had here. So this is a company that with all its warts, with all the fears from its ex-bankruptcy, they've got this company pretty lean and set up for the future, Andy.

Diane King-Hall (3:13)

Yeah, they're down to the brands that matter to their consumers, and they're going to lose less on the EV side of things, which I think is smart. There's a lot of people that have no interest in EVs, and most of those people are stepping on to the GM parking lots and checking things out. They're not going to compete with Tesla in the EV market. I think that that's already been pretty much lost, and they can start to focus on what matters and what they're really good at. Essentially, that's trucks, corvettes, and SUVs. That's where their bread and butter is. That's where the consumer that wants to buy from GM is looking and willing to pay a pretty hefty price for those vehicles. If you look at some of the Cadillac pricing or even Yukon pricing, those can get extremely expensive, but people are willing to pay it because they want that big vehicle for their large family and a lot of things that they're doing. So GM's found its niche now. It's not expanded to all these.

Kevin went through the list. It was incredible how much he was able to do off of memory there. But for us, looking at the way GM has essentially restructured itself, it seems to be resonating with consumers on Main Street for the first time in a very positive way for years, and especially the last few quarters, a big swing to the upside. So we think they have reason to be optimistic on this call. Andy, let me ask you this. Was there anything that showed up in your sentiment data with consumers worried about gas prices impacting the type of vehicle they were interested in?