GM Profit Margin By Segment: Automotive, Cruise, And Financial

The Interior of a GM Cadillac CTS. Source: Flickr Image.

General Motors (GM) has structured its financial reporting around three primary subsidiaries: Automotive, Cruise, and GM Financial.

• Automotive: This segment is further divided into:
• GM North America (GMNA)
• GM International (GMI)
• Corporate
• Cruise
• GM Financial

The Automotive division is segmented into GMNA, GMI, and Corporate, each contributing uniquely to GM’s overall performance. This article will delve into the profitability and margins of these subsidiaries.

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You may find other key statistic of General Motors on these pages:

• GM global sales and market share,
• GM revenue sources: sales of new and used cars, services, and more, and
• GM financial health: total debt, payment due, and cash.

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Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Adjusted EBIT: GM defines the adjusted EBIT as earnings before interest and taxes, net of non-controlling interests.

The adjusted EBIT is a non-GAAP metric used by management. Investors can use it to review the company’s consolidated operating results because it excludes automotive interest income, automotive interest expense, income taxes, and certain additional adjustments that are not considered part of GM’s core operations.

Examples of adjustments to EBIT include but are not limited to, impairment charges on long-lived assets and other exit costs resulting from strategic shifts in operations or discrete market and business conditions and certain costs arising from legal matters.

The corresponding measure for the GM Financial segment is EBT-adjusted or adjusted earnings before taxes because interest income and interest expense are part of GM Financial’s operating results when assessing and measuring this segment’s operational and financial performance.

Equity Income: In accounting, equity income refers to the portion of a company’s net income attributed to a particular investor or group of investors, based on their ownership stake in the company.

This income is typically derived from the company’s ongoing operations and is distributed to shareholders through dividend payments. Equity income is recorded on the investor’s income statement as a portion of their overall investment portfolio income.

It is important to note that equity income is not a guarantee and can fluctuate based on the performance of the company and the overall market conditions.

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GM North America (GMNA)

GMNA’s financial results are obtained from GM’s annual reports.

A definition of the adjusted EBIT is available here: adjusted EBIT.

GM North America (GMNA) manages General Motors’ operations across the United States, Canada, and Mexico, serving as a pivotal division for the company’s overall business. Its extensive portfolio includes renowned automotive brands such as Chevrolet, Cadillac, GMC, and Buick, which collectively cater to diverse consumer needs and preferences across North America.

Over the years, GMNA has consistently generated significant automotive revenue, typically surpassing $100 billion annually. In fiscal year 2024, GMNA reported an exceptional revenue milestone of $157.6 billion, marking its highest figure in the last five years and showcasing robust growth within the segment.

Profitability has also been a strong suit for GMNA. From fiscal years 2020 to 2024, the division averaged $17 billion in gross profit annually. Adjusted Earnings Before Interest and Taxes (EBIT) over the same period amounted to an average of $11.5 billion, reflecting its ability to maintain operational efficiency while driving substantial earnings.

GMNA’s profit margins further underline its financial strength. The division achieved an average gross margin of approximately 13.6%, demonstrating its ability to manage production costs effectively relative to revenue. Meanwhile, its adjusted EBIT margin averaged 9.5%, emphasizing its capability to generate solid operational profits while navigating market dynamics.

This analysis highlights GMNA’s critical role in sustaining and expanding General Motors’ financial performance, offering insights into its revenue generation, profitability, and operational efficiency over recent years. Beyond its financial contributions, GMNA represents a key strategic pillar in GM’s overall business, continuously shaping the company’s success in the automotive industry.

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GM International (GMI)

GMI’s financial results are obtained from GM’s annual reports.

A definition of the adjusted EBIT and equity income is available here: adjusted EBIT and equity income.

General Motors International (GMI), a subsidiary of General Motors (GM), operates as the company’s gateway to markets beyond North America. This division oversees GM’s sales, marketing, and manufacturing activities across Asia, Europe, Africa, and the Middle East, positioning itself as a global force in the automotive industry.

GM’s story spans over a century, originating in the early era of automobile innovation. Over time, GMI has evolved into a vital player within GM’s broader strategy, particularly in emerging economies where demand for reliable, innovative vehicles continues to rise. Its portfolio includes prestigious brands such as Chevrolet, Cadillac, Buick, and GMC, which resonate strongly with consumers worldwide.

One of GMI’s strategic priorities is its operations in China, the world’s largest automotive market. Through joint ventures with domestic partners, GMI not only produces its global vehicles but also markets Chinese brands such as Baojun, Buick, Cadillac, Chevrolet, Jiefang, and Wuling.

Despite economic fluctuations, these joint ventures continue to generate significant contributions. In fiscal year 2024, GMI’s investment in China joint ventures was reported at $1.5 billion, a notable reduction from the $6.4 billion value in 2023. Although GM does not fully own these ventures, it benefits from equity income, which is integrated into the parent company’s consolidated earnings.

Financially, GMI showcased a robust recovery in recent years, contributing $13.9 billion in automotive revenue in fiscal year 2024 — a substantial improvement. This division also delivered noteworthy profits, reporting $1.3 billion in gross profit and $303 million in adjusted EBIT for the same year.

From fiscal years 2020 to 2024, the average gross profit amounted to $764 million, and the adjusted EBIT reached $591 million, underscoring the division’s growing resilience.

While GMI’s profit margins remain modest compared to GM North America (GMNA), they highlight the division’s importance in GM’s global strategy. GMI’s gross margin averaged 4.8% over the past five years, with an adjusted EBIT margin of 3.8%. Although these figures indicate lower profitability than GMNA, they reflect the unique challenges and opportunities present in international markets.

Overall, GMI represents a critical component of GM’s business, driving international revenue, fostering strategic partnerships, and capitalizing on growth opportunities in diverse regions. Its performance underscores GM’s capacity to adapt and thrive in the dynamic global automotive landscape.

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GM Corporate

GM Corporate’s financial results are obtained from GM’s annual reports.

According to General Motors’ annual reports, GM Corporate encompasses centrally recorded income and costs that are not attributed to specific operating segments. This division includes elements such as interest expenses, income taxes, corporate-level expenditures, and miscellaneous revenues and expenses that fall outside of GM’s reportable segments, serving as an administrative and financial framework for the company’s overall operations.

Despite its essential role in supporting the broader organization, GM Corporate consistently operates at a financial deficit. Unlike the Automotive, and GM Financial segments, this division does not generate substantial revenues or profits. Instead, it typically incurs losses due to its structural function of consolidating and managing costs at the corporate level.

Financially, GM Corporate has reported negative performance metrics in recent years. From fiscal year 2020 to 2024, its average gross profit was recorded at -$109 million per year, reflecting recurring operational losses. During the same period, the division’s annual revenues averaged a modest $222 million, underscoring its limited role as a revenue-generating entity.

While GM Corporate’s financial figures may seem underwhelming, it is important to view this segment within the context of its purpose. Its primary function lies in consolidating overhead costs and addressing corporate-level financial responsibilities, which inherently limits its potential to achieve profitability. Moreover, these centralized operations enable GM’s core business segments, such as Automotive, to focus more effectively on their strategic objectives without being burdened by administrative complexities.

In summary, GM Corporate acts as the backbone of General Motors’ administrative and financial infrastructure, playing a crucial but non-profitable role in the company’s operations. Its recurring financial losses and modest revenue contributions reflect the nature of its purpose within GM’s broader organizational framework.

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Cruise

Cruise’s financial results are obtained from GM’s annual reports.

A definition of the adjusted EBIT is available here: adjusted EBIT. Cruise is a new reportable segment since 2019.

Cruise, a subsidiary of General Motors (GM), is dedicated to developing and commercializing cutting-edge autonomous vehicle technology and self-driving innovations. As a strategic venture, Cruise plays a critical role in GM’s vision for the future of mobility, aiming to revolutionize transportation through autonomous solutions.

Despite its ambitious goals, Cruise has struggled to achieve profitability, much like GM Corporate. However, Cruise’s financial challenges have been more pronounced, with its EBIT-adjusted losses escalating significantly in recent years. From 2020 to 2023, Cruise’s adjusted EBIT losses expanded from $887 million to $2.7 billion. Fiscal year 2024 saw an improvement, with adjusted EBIT losses reduced to $1.7 billion, signaling efforts toward better cost management.

Revenue generation remains a weak spot for Cruise. Over the past five fiscal years, its average annual revenue has been modest, totaling only around $134 million. This limited revenue reflects the early-stage nature of its operations, as the division focuses heavily on research and development rather than immediate market penetration.

Nevertheless, Cruise has seen substantial financial backing to fuel its ambitious initiatives. Between 2018 and 2019, the subsidiary secured more than $4 billion in capital injections by issuing preferred shares to key investors, including SoftBank Vision Fund, Honda, and GM itself.

In January 2021, Cruise attracted further investments, issuing preferred shares to multiple investors, including Microsoft, in exchange for $2.2 billion in cash. GM also participated in this funding round, contributing an additional $1 billion to support Cruise’s growth and development.

While Cruise’s financial performance indicates ongoing challenges, the division’s importance within GM’s broader strategy cannot be overstated. Its focus on autonomous vehicle technology aligns with GM’s long-term vision of transforming mobility and driving innovation in the automotive industry. With continued investments and advancements, Cruise holds the potential to become a cornerstone of GM’s future success, despite its current profitability concerns.

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GM Financial

GM Financial’s financial results are obtained from GM’s annual reports.

GM Financial is a global captive automotive finance company that plays a pivotal role in supporting General Motors’ operations worldwide. It provides a comprehensive range of automotive finance solutions, conducting business across North America, South America, and through joint ventures in the Asia Pacific region. By offering financing options to both consumers and dealers, GM Financial bolsters GM’s sales network and ensures the seamless flow of operations.

The primary functions of GM Financial are multifaceted. It offers retail loans and lease-lending services to customers across all credit spectrums, enabling vehicle purchases and leases for a diverse range of consumers. Additionally, GM Financial provides commercial lending products to dealers. These loans assist dealerships in financing critical business needs, such as new store openings, facility upgrades, and dealership real estate acquisitions, thereby strengthening GM’s dealership network and market presence.

Financially, GM Financial has established itself as a more stable and predictable business compared to GM’s automotive segment. From 2020 to 2024, its annual revenue averaged $13.6 billion, reflecting consistent growth and resilience. In fiscal year 2024, GM Financial reported $15.9 billion in revenue, a 12% increase compared to 2023, marking another year of solid performance.

Despite the rise in revenue, profitability remained flat due to higher interest expenses and reduced leased vehicle income, net of related expenses, as highlighted in the annual report. These factors contributed to an adjusted earnings before taxes (EBT) of $3.0 billion, aligning with the previous year’s results.

GM Financial’s adjusted EBT margin declined to 18.7% in fiscal year 2024, its lowest level since 2020. This reduction was largely driven by the external economic environment and operational cost increases. However, over the five-year period from 2020 to 2024, the subsidiary maintained an impressive average EBT margin of 26%, underscoring its ability to generate consistent profitability. This performance makes GM Financial the most profitable subsidiary of General Motors, even if it is not the largest contributor to overall profits.

As a cornerstone of GM’s financial ecosystem, GM Financial provides critical support to the company’s global strategy by offering financing solutions that drive vehicle sales, strengthen dealership operations, and expand market accessibility. Its steady financial contributions and strategic alignment with GM’s goals underscore its indispensable role in the company’s success.

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Insight

GM’s ability to balance its high-performing segments (GMNA and GM Financial) with its forward-looking ventures (Cruise) and global expansions (GMI) demonstrates a cohesive strategy of managing present profitability while investing in future growth.

This diversified approach enables GM to maintain resilience in fluctuating markets and positions it as a competitive force in the evolving automotive landscape.

Each subsidiary plays a distinct role in supporting GM’s overarching goal of sustaining profitability while driving innovation and globalization

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References and Credits

1. All financial figures presented here were obtained and referenced from GM’s quarterly and annual reports published on the company’s investor relations page: General Motors Investor Relations.

2. Flickr Images.

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Disclosure

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