By 2028, the US car manufacturer General Motors (GM) expects additional costs of $9.3 billion due to collective bargaining agreements, the company announced on Wednesday. This equates to approximately $575 per vehicle.
At the end of October, the Detroit car manufacturer reached an agreement with the United Auto Workers (UAW) union on a collective bargaining agreement. This was preceded by a historic simultaneous strike against the three major US car manufacturers Ford, Stellantis and GM, which lasted six weeks. GM’s invoice now also includes the follow-up costs of an agreement with the Canadian union Unifor. At the beginning of October, the company estimated the financial damage from the US collective bargaining strike at $200 million.
CEO Mary Barra therefore lowered the profit forecast for the current financial year to $9.1 to $9.7 billion from the previously targeted $9.3 to $10.7 billion. Barra wants to apply the red pencil to the Robotaxi subsidiary Cruise. “We expect Cruise’s growth to be more gradual once operations resume,” the manager said. This will lead to significantly lower expenses in 2024 than in 2023. The group must regain the trust of the supervisory authorities.
After a serious accident involving a pedestrian in San Francisco, the GM subsidiary suspended the operation of robotaxis nationwide by order of the authorities there. Cruise has interrupted production of the fully autonomous transporter models called Origin in Detroit. In the third quarter, the company lost $728 million – more than $8 billion has been lost since 2017.
Shareholders can still look forward to generous profit shares. “We will return a lot of capital to shareholders,” assured Barra. GM is planning an accelerated share buyback program worth ten billion dollars. In addition, the dividend for common shares should be increased by three US cents per quarter to twelve cents per share from 2024.
The corporate treasury is well filled. In view of the recent record profits, the cash holdings are well above the self-imposed target, said the GM boss. After the announced share buyback, the car manufacturer will still have $1.4 billion in savings for further share buybacks.