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General Motors hits record sales, but plans to let the Bolt go

Avatar photo Scarlet Logan on June 26, 2023

General Motors — Car manufacturing giant General Motors has endured a few lackluster years in terms of performance.

The company has also had to go through a fire-provoked recall recently, which might have dented its performance.

However, General Motors’ all-electric Chevrolet Bolt EV is finally gaining traction.

Recent success

The United States’ cheapest EV is going through significant price cuts, and US sales of the Chevy Bolt were up by more than 50% in 2022.

General Motors also said it would produce a record 70,000 units this year.

However, the company isn’t leaning into the vehicle’s recent success and improved production.

On Tuesday, General Motors CEO Mary Barra said the company would end production of the vehicle dubbed “a game-changer” later this year.

“We have progressed so far that it’s now time to plan to end the Chevrolet Bolt EV and EUV production, which will happen at the very end of the year,” said Barra during an earnings call.

Her comments regarding the vehicle’s canceled production spoke volumes when combined with the company’s plans to produce profitable electric vehicles in the coming years.

General Motors is looking to deliver single-digit profits from its EV portfolio by 2025. 

The company wants to hit a production capacity of 1 million EVs in North America by then.

To achieve the goal, General Motors needs the production capacity, profits, and market position of the upcoming next-generation EVs.

However, the company believes it needs the Bolt.

Production projections

The timing of the company’s decision caught experts off guard as many expected General Motors to produce the Bolt into at least 2024.

“It was more than I expected,” said Michelle Krebs, the executive analyst for Cox Automotive.

“I thought it would go away at some point when new batteries came on and they went to more body styles, but it struck me as rather abrupt.”

A company spokesman said the timing of the announcement aligned with the General Motors need to notify suppliers about the end of production.

It also coincides with progress linked to the $4 billion GM is spending to retool the Bolt plant in Michigan for the GMC Sierra and Chevrolet Silverado electric pickup trucks.

The decision is part of General Motors’ EV strategy to retool existing plants instead of building new ones, but it will likely be done in the future.

GM also said retooling would save time and capital, allowing the company flexibility to partially convert plants and build different gas-powered models.

Regarding the Orion plant that solely manufactures the Bolt, it doesn’t make sense as the company believes it needs the extra capacity.

Additionally, the Bolt doesn’t contribute to General Motor’s bottom line.

On Tuesday, Barra said when the Orion plant reopens in 2024, General Motors would have a total production capacity of 600,000 EV pickups annually.

“We’ll need this capacity because our trucks more than measure up to our customers’ expectation, and we’ll demonstrate that work and EV range are not mutually exclusive terms for Chevrolet and GMC trucks,” said Barra.

Read also: Banks to be pitched to save First Republic with urgency

Ultium and profits

General Motors promised investors that its next-generation EVs would be profitable.

The EVs will be built on a new architecture, Ultium.

The promise marks a milestone that the Bolt models were never believed to have achieved.

General Motors will cut starting prices by as much as $6,300 for the 2022 model year to increase interest for the Bolt and make it more affordable.

The Bolt EV will then start at $26,595, while the Bolt EUV at $28,195.

“Bolt is selling better than it ever has since the company dropped the price,” said Sam Abuelsamid, Guidehouse Insights principal analyst.

“So, they don’t want to keep it going longer. They’re losing money on it.”

General Motors is expecting to earn low to mid-single-digit adjusted profit with its EV portfolio in 2025.

The expectations exclude the positive impact of clean tax credits, like those included in the Inflation Reduction Act.

With those credits, the company said it expects the new EV portfolio to be profitable like its cars and trucks with traditional engines by 2025, years earlier than many anticipated.

While the credits would have boosted the profit margin on the Bolt, the car uses older battery technology from LG.

General Motors is now focused on scaling up most cost-effective in-house battery production through a plant that operates as a joint venture with a South Korean firm.

The Ultium ramp-up and cost efficiencies achieved with the new EV pickups allows for margin improvements the Bolt couldn’t have realized in the long-term.

“As we scale EVs, we will lower fixed costs and will continue to drive margin improvements,” said Barra.

Coca-Cola exceeds Wall Street revenue expectations

Avatar photo Brandon Foster on April 24, 2023

Coca-Cola — On Monday, beverage titan Coca-Cola shared its quarterly earnings, which came out as a positive.

The company’s earnings and revenues were revealed to have topped analysts’ expectations.

Factors behind the positive development can be attributed to price hikes and higher demand for the beverage.

Trading

On Monday morning trading, shares of Coca-Cola were up by less than 1%.

Based on a survey by Refinitiv analysts, the following is a comparison of the company’s report with Wall Street’s expectation:

  • Coca-Cola earnings per share: 68 cents adjusted
  • Coca-Cola revenue: $10.96 billion adjust
  • Wall Street expected earnings per share: 64 cents
  • Wall Street expected revenue: $10.8

Coke reported that first-quarter net income due to shareholders of $3.11 billion (72 cents per share) were up from $2.78 billion (64 cents per share) from 2022.

Coca-Cola earned 68 cents per share, excluding certain tax matters, restructuring changes, and other items.

Additionally, net sales rose by 5%, going up to $10.98 billion.

Organic revenue, which removes the impact of acquisitions and divestitures, went up by 12% in the quarter.

It was largely driven by the higher prices of Coca-Cola drinks.

Higher prices

As with most companies this past year, Coca-Cola has been increasing its prices to counter the effects of inflation.

Majority of the first quarter’s price hikes were implemented in 2022.

However, company executives said Coke raised prices even more across operating segments over the first three months of the year.

However, higher prices have also had a muted effect on the demand for Coke products.

Unit case volume

Coca-Cola’s unit case volume grew by 3% in the quarter, excluding the impact of pricing and currency changes.

In North America, volume was flat, while volume fell by 3% in areas like Africa, Europe, and the Middle East.

However, Latin America and Asia-Pacific regions showed that demand remained strong.

Coke also reported a 3% volume growth with its sparkling soft drinks units.

The Coca-Cola soda showed positive signs, with reports of 3% volume growth.

Meanwhile, Coke Zero Sugar’s volume also saw an 8% increase.

Several of the company’s divisions witnessed volume growth of 4%  including:

  • Water
  • Sports
  • Coffee
  • Tea

The surge can be attributed to strong demand for Coke’s coffee and bottled water.

The company’s coffee business reported that its volume saw a 9% volume increase.

Meanwhile, the water division volume rose by 5%.

The tea division saw volume shrink by 4% in the quarter following an earthquake in Turkey.

Sports drinks volume, which covers Bodyarmor and Powerade, also saw declines.

Additionally, the suspension of Coke’s Russian business offset some strong parts, which includes strong sales for the Fairlife dairy brand in the United States.

Read also: SpaceX fails to make orbit but remains a successful launch

Previous forecast

In February, Coca-Cola projected comparable revenue growth of 3% to 5%, with comparable earnings per share growth at a higher 4% to 5% for 2023.

Meanwhile, Wall Street projected revenue growth of 3.9%, while earners per share growth were cast at 3% for the year.

Coca-Cola CEO James Quincey said:

“Inflation is likely to moderate as we go through the year, and there we expect the rate in which prices are going to increase will start to moderate and become more normal by the end of the year.”

In the latest earnings report, the company said it was projecting organic revenue growth of 7% to 8% with comparable earnings per share growth of 4% to 5%.

Furthermore, Coca-Cola is expecting commodity inflation to impact its cost of goods sold by mid single digits this year.

CFO John Murphy spoke with analysts during the company conference call, saying that while oil spot prices and freight costs are down, other commodities’ higher prices will stay for a longer period.

Murphy added that Coca-Cola is holding on to its financial flexibility during its long-running tax battle with the IRS.

Earlier in November 2020, the US Tax Court maintained that the company owed $3.4 billion in taxes.

Since then, the figure has been cut down to $1.6 billion.

Murphy said the company is waiting for the tax court to make its final opinion on the case before the company moves forward in the appeals process.

“Overall, we don’t expect the tax dispute to have a bearing on our ability to deliver on our capital allocation agenda and drive long-term business growth.”

Apartments in Manhattan saw a drop in sales

Avatar photo Alice Blake on February 27, 2023

…

Apartment: People were alarmed by the sharp 29% decline in apartment sales in Manhattan over the fourth quarter.

Fears that the market will stall due to buyers’ and sellers’ anxiety owing to the status of the economy and interest rates have been raised by the decline.

The news

2,546 sales were made altogether in the fourth quarter, per analysis by Douglas Elliman and Miller Samuel.

Even though the numbers were good, they were 3,560 less than the year before.

The pandemic’s peak has also been the largest since its apex in the third quarter of 2020.

However, the median price did drop by 5.5%, marking the first price drop since the beginning of 2020.

Market

The real estate market in Manhattan has finally recovered from the devastating effects of the pandemic, but the drop in sales and prices raises some concerns about potential new problems in 2023.

The following factors have had a significant impact on the Manhattan real estate market and are probably going to play a role this year:

  • Rising interest rates
  • A weaker economy
  • A declining stock market

Concerns

Analysts believe a prolonged stalemate between buyers and sellers is the most significant concern.

There won’t be buyers until prices fall since sellers won’t offer while costs decline.

The CEO of Miller Samuel, an appraisal company that offers market research, is Jonathan Miller, who commented on the issue.

“I could see the market moving sideways, with some modest declines in some sectors,” said Miller.

“And it could weaken further if there is the backdrop of recession and job loss.”

Inventory

Despite declining sales and prices, inventory is still low because some sellers are stalling their listings.

After the fourth quarter, there were 6,523 units still available, according to the report.

Although there was a 5% increase, the numbers are still below the historical average of close to 8,000.

Analysts predict prices won’t decrease enough to entice buyers waiting for reductions because inventory hasn’t significantly increased.

In contrast to the third quarter’s 4.1%, according to Serhant, there was a 6.5% difference between the initial list price and the sales price.

According to Jonathan Miller, as borrowing costs increased, more Manhattan buyers chose to make all-cash acquisitions.

The deals represent the highest proportion of sales ever: 55% for the fourth quarter.

Read also: Apple and Tesla stocks drop in 4th quarter

Luxury units

Still making up the vast bulk of the market are luxury and high-end apartments.

They comprise the top 10% of the New York real estate market.

Despite a dip in the general Manhattan market, the median sales price for luxury apartments rose by 4% in the fourth quarter.

Additionally, since 2019, the median price for high-end and luxury apartments has climbed by 21%, which is twice as much as the whole market.

2023 outlook

The network of freshly formed and ongoing alliances predicts a sluggish first quarter.

According to Brown Harris Stevens, only 2,312 contracts were signed in the fourth quarter, a decrease of more than 43% from 2022.

Meanwhile, Serhant says that this quarter was the worst for signing new contracts in the last ten years.

“Contracts signed are a timelier indicator of demand and registered one of the slowest finishes to any year since 2008,” said Brown Harris Stevens.

Brokers are nonetheless optimistic, as many believe this year will deliver a pleasant surprise.

They cited the rates’ recent stabilization and shoppers’ ability to get deals in a market that is currently softening.

Deals

Due to the frequency of year-end deals, John Gomes, the Eklund Gomes team co-founder at Douglas Elliman, said December was “on fire.”

“It really caught us off guard,” said Gomes.

“Things really turned around in December.”

John Gomes claims that a shopper paid $20 million for a townhouse in Greenwich Village even though it wasn’t for sale.

Additionally, he said that a real estate investor submitted offers for particular flats in the development, which appeared to be accepted today.

Foreign influence

Gomes attributed the growth in sales in December to the influx of overseas clients, many of whom began returning to New York in December.

Travel restrictions worldwide are gradually easing, and the dollar value is somewhat starting to fall.

Brokers claim buyers returned in December, mostly from China and the Middle East.

Brokers claim that purchasers are paying cash and taking advantage of lower costs to avoid rising interest rates.

To sell any remaining apartments, developers of new apartment buildings are likewise decreasing prices.

“Developers are being realistic, they’re making concessions on price and closing costs,” said John Gomes.

“I feel optimistic about the coming year.”

Reference:

Manhattan apartment sales plunge in fourth quarter as brokers fear a frozen market

Nike leaning towards Gen Z China consumers after Covid restrictions are lifted

Avatar photo Scarlet Logan on January 16, 2023

…

Nike: Gen Z, also known as the “digital natives,” are the youngest consumers in the market, born between 1997 and 2012.

They are the first generation to grow up with technology as a fundamental part of their daily lives, dramatically influencing consumer behavior.

Gen Z has a strong sense of individuality and values authenticity and transparency, and they are known for their savvy when it comes to technology, social media, and e-commerce.

They are also more diverse and socially conscious than previous generations.

As a result, businesses and marketers have had to adapt their strategies to better appeal to this demographic.

John Donahoe, the CEO of Nike, recently said that the company is focusing on Gen Z consumers, particularly in China.

Nike & Gen Z

Nike, one of the world’s leading sportswear brands, has had to adapt its strategies to appeal to Gen Z consumers.

As a demographic, Gen Z is known for its strong sense of individuality and values authenticity and transparency.

They also have a keen interest in sustainability and social responsibility, leading many to prioritize purchasing from socially responsible companies.

Appealing to a generation

To appeal to Gen Z consumers, Nike has focused on building sustainable and transparent supply chains and has actively promoted social issues such as diversity and inclusion.

The company has also focused on creating customizable products that allow consumers to express their individuality.

One example is the Nike By You program, which allows customers to design their own sneakers using a wide range of colors and materials.

Social media use

In addition, Nike has also been investing in digital marketing and e-commerce to reach Gen Z consumers, who are known for their tech-savvy and heavy use of social media.

The company has also been active on social media platforms such as Instagram and

TikTok is where it has been able to connect with Gen Z consumers and showcase its products and brand message.

Overall, Nike has successfully appealed to Gen Z consumers by prioritizing sustainability, inclusivity, and personalization in its products and marketing.

And by having a robust online presence and leveraging digital marketing, the company has effectively reached and connected with this demographic.

Read also: CPI set to influence the Fed’s 2023 plans for inflation

China consumers

On Thursday, John Donahoe described how the athletic apparel retailer continues to experience strong demand in China amid Covid disruptions.

“We’re still the number one cool and favorite brand in Shanghai and in Beijing,” said Donahoe.

“We’re really focused on the Gen Z consumer in China, we saw a very good response from the Gen Z consumer who wants the most innovative products and wants brands that are globally relevant.”

“We saw good response in Q2, and we have the same focus and outlook going forward.”

Revenue

China’s “zero Covid policy” was still up when Nike’s fiscal second quarter concluded on November 30.

1,500 Nike stores across the country were shut down, causing a 3% sales drop.

The company’s revenue in China was down by 22% in the same quarter period in 2021 when Covid disruptions were more stable.

While John Donahoe didn’t address how spending ramped up since the country lifted its zero Covid policy, he asserted that the company is confident China is still a strong market.

“We factored in some disruption in our outlook, but we view that as transitory, we still believe in the fundamentals of China,” he said.

“We invested in building hyperlocal products where we take an iconic franchise like Air Force One, or Dunk, and we localize it so it’s relevant for the Chinese consumer – and the Chinese consumer really responded to that.”

Inventory

For the past few quarters, Nike has struggled with inventory, but Donahoe assured people that the problem was happening in North America.

In addition, he said the company is working on hitting levels normalized in May.

“The consumer is still paying list price for the Nike products that they know and love,” said Donahoe.

“In the areas where we have excess inventory, which is primarily in North America, we are working through it. We’re discounting and working through it.”

Nike has been moving away from wholesalers to try a direct-to-consumer strategy.

However, during the recent fiscal quarter, whole revenue jumped 19% due to the company’s inventory availability to sell to partners.

Although the company invested in its new strategy, Donahoe said wholesalers are still crucial to Nike.

“Consumers in this day and age want to get what they want, when they want it, how they want it, and in our industry, they’ve been very clear they want a premium and consistent shopping experience regardless of channel,” said Donahoe.

Reference:Set featured image

Nike CEO touts strength in Gen Z China shopper as Covid disruptions dent regional sales

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