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Their comments highlight an optimistic report released by the U.S. Commerce Department indicating a surprising increase in retail sales for May as a growing number of consumers are purchasing vehicles and various other goods.
“If the consumer remains at this strength, we could significantly outperform what we said” about full-year performance, General Motors Chief Financial Officer Paul Jacobson told a Deutsche Bank investor conference.
Ford Chief Financial Officer John Lawler, in a separate interview at the conference, said “the consumer is hanging in there” while noting continued strength and “pricing power” in the company’s Ford Pro commercial business.
The statements represent a notable change from earlier this year when numerous economists and certain auto industry leaders were preparing for a potential recession in the United States. In January, Tesla (NASDAQ:TSLA) CEO Elon Musk predicted a “serious recession” and responded by reducing prices on the company’s electric vehicles.
However, thanks to the alleviation of supply chain challenges, the U.S. automotive market has shown signs of stability, and vehicle production has rebounded, approaching levels seen before the pandemic.
Jacobson and Lawler said their companies will keep pushing cost-reduction programs that have already cut thousands of jobs from Ford and GM payrolls.
Lawler said Ford sees continued strength and growth in its combustion-engine vehicles “for the next few years,” but is focused on slashing engineering and manufacturing costs by 50% on its second-generation EVs. Lawler hinted that Ford may follow Tesla’s lead in employing large underbody castings on its next-generation electric vehicles in its broader efforts to trim costs.
Jacobson said GM will not let up on its effort to cut $2 billion out of annual operating costs. He said cost reduction should not be “a program…and we go back to the way it was. We have to cultivate continuing improvement on the cost side.”
Both executives believe the decisions by their companies to join Tesla’s EV charging network and embrace its NACS (North American Charging Standard) charging protocol will save money and benefit their EV customers.
Shares of GM and F are up 2.22% and 1.80% respectively in afternoon trading on Thursday.
