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Which GM Business Segments Are Making The Most Money

The Interior of a GM Cadillac CTS

General Motors or GM reported its financial results according to the following business segments:

  • GM North America (GMNA)
  • GM International (GMI)
  • GM Cruise
  • GM Financial
  • GM Corporate

GM North America (GMNA)

GMNA is responsible for meeting the demands of customers in North America with vehicles developed, manufactured, and/or marketed under the brand names such as Buick, Cadillac, Chevrolet, and GMC.

GMNA contributed the major buck of the revenue to the company in 2018, totaling $113.8 billion with 3.6 million vehicles sold in North America alone.

Among all the business segments of GM, the GMNA is the most profitable, generating an adjusted net income (EBIT-adjusted) of $10.8 billion in 2018 and having an adjusted margin (EBIT-adjusted margin) of 9.5%.

GM International (GMI)

On the other hand, GMI is responsible for meeting the demands of customers outside of North America with vehicles developed, manufactured and/or marketed under the brand names such as Buick, Cadillac, Chevrolet, GMC and Holden.

In addition, GM has invested a substantial number of equity stakes in companies through join ventures in China, with vehicles developed, manufactured and/or marketed under the brands such as Baojun, Buick, Cadillac, Chevrolet, Jiefang and Wuling.

According to the Dec 31 2018 annual report, the revenue generated from GM International was $19 billion with 1.2 million of vehicle sold.

In 2018, China alone contributed about $2.0 billion of equity income to GM profit through joint ventures.

Take note that the $2.0 billion of equity income is not a revenue. It’s a net income or profit contributed by the join venture companies in China in which GM has a substantial control over the companies, such as holding more than 20% of the companies’ stock.

To learn more about equity income, you can visit Equity Method Accounting.

GM Cruise

GM Cruise is the company new reportable segment in 2018 because of the growing importance of autonomous vehicle operations. GM Cruise is responsible for the development and commercialization of autonomous vehicle technology.

According to the Dec 31 2018 annual report, GM Cruise has not generated any revenue. Instead the business unit has burned about $715 million and $592 million in cost of goods sales in 2018 and 2017 respectively. In terms of profitability, GM Cruise suffered a loss of $728 million in 2018 alone and has a negative operating cash flow of $600 million in the same year.

The good news is that GM Cruise has received about $1.7 billion of capital injection from Softbank and Honda respectively in 2018. Softbank and Honda have bought shares issued by GM Cruise. Moreover, GM itself has also invested about $1.1 billion in GM Cruise to speed up the development of autonomous driving technology.

GM Financial

GM provides automotive financial services through General Motors Financial Company (GM Financial). This business unit is playing a very important role in the company by offering customers with access to credit or lease financing, vehicle insurance and extended service contracts when purchasing vehicles at any GM authorized dealership.

GM financial is a global provider of automobile finance solutions to customers in North America, South America and through joint ventures in China. The business unit is not only serving retail customers by providing retail loans or lease lending but also commercial customers such as dealers who requires working capitals to finance new stores opening or improvement to dealership facilities as well as loans to purchase dealership real estate.

The revenue generated by GM financial has been increasing from $9 billion in 2016 to $14 billion in 2018. The increment was primarily due to the increase in lease vehicle income and the growth in retail and commercial lending.

GM Corporate

All other business segments which are not separated out are listed under GM Corporate. One of which is the Maven, a car and ride sharing business. The revenue generated under Corporate was only $203 million and $342 million in 2018 and 2017 respectively.

Disclosure:
The authors wrote this article themselves, and it expresses their own opinions. The authors are not receiving compensation for writing the article. The authors have no business relationship with any company whose stocks are mentioned in this article.

References:
1. All financial figures in this page were obtained from GM quarterly and annual reports through its Investor Relation website: General Motor Investor Relations.

2. Featured image was obtained from GmanViz and Alan Gore.

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