Auto Sales Rebound Faster Than Analysts Had Predicted
RACHEL MARTIN, HOST:
OK. All morning, we're keeping you up to date on the election news, but we want to bring you a business story. General Motors reported a massive surge in earnings this week, and the company is not alone. After tough times earlier this year, the auto sector is coming back with a bang. Here's NPR's Camila Domonoske.
CAMILA DOMONOSKE, BYLINE: This spring was absolutely brutal for automakers. Plants were shut down because of the pandemic. They couldn't sell cars because they weren't making them. They were bleeding billions of dollars. But July, August and September were a different story.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED PERSON #1: It's pretty impressive, right? I mean, I don't think this should be undersold.
UNIDENTIFIED PERSON #2: Yeah, impressive results, I've got to say.
UNIDENTIFIED PERSON #3: I hope it is a sign of things to come.
DOMONOSKE: That's analysts from Wall Street congratulating General Motors, Fiat Chrysler and Ford for raking it in in the third quarter. These weren't good for a pandemic earnings. They were good, period. Fiat Chrysler had record profits. Ford paid back $15 billion it had borrowed to make it through the pandemic with plenty to spare. GM doubled Wall Street's expectations. To be clear, the pandemic did hurt the car industry. Stephanie Brinley is an analyst with IHS Markit.
STEPHANIE BRINLEY: It will help offset the fact that the second quarter was terrible (laughter).
DOMONOSKE: But this recovery is way faster and stronger than anyone anticipated. People who can afford new vehicles right now are eager to buy. Partly, it's pent-up demand from earlier this year, when people stayed away from showrooms. The stimulus checks helped drive demand even higher. And instead of commuter cars - lots of people aren't commuting now - buyers are mostly choosing pickups or pricier vehicles, which make more money for manufacturers. All of that is good for carmakers. Overall, Brinley says the industry is optimistic, cautiously optimistic.
BRINLEY: We'll see how the economy goes. We don't really know exactly how things are going to go with COVID There is still opportunity to have difficulty in the next year.
DOMONOSKE: For automakers, this cash infusion is a relief in more ways than one. It's not just making up for recent losses. They also need it to pay for hefty investments coming up soon. Every major automaker is banking on a future in electric vehicles, and that's a really expensive transformation. In her most recent earnings call, GM's CEO, Mary Barra, emphasized that GM can spend its own money investing in electric vehicles - or EVs - thanks to all the cash coming in right now from full-sized trucks and SUVs in North America.
(SOUNDBITE OF ARCHIVED RECORDING)
MARY BARRA: We're going to go hard at EVs. And the North America performance allows us to do that.
DOMONOSKE: GM is pouring billions into converting plants to go electric. And Tesla, which led the way on electric vehicles, has been profitable all year. Camila Domonoske, NPR News.
(SOUNDBITE OF AESOP ROCK SONG, "MYSTERY FISH")
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.