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Will North America Segment Drive General Motors' (GM) Q2 Earnings?

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General Motors’ (GM - Free Report) North American market segment — which contributes a bulk of the company’s overall revenues — is likely to have fueled the company’s second-quarter earnings, scheduled for a Aug 4 release before the bell.

(Also Read: Can General Motors Maintain its Earnings Beat Streak in Q2?)

Q1 Highlights for GM’s North American Market

In the last reported quarter, wholesale unit volumes in the North American segment declined from the 775,000 units reported in the year-ago quarter to 664,000 units. Nonetheless, vehicles sold in the Unites States totaled 642,250, up 4% year on year. Deliveries for both Cadillac and Buick brands were up 43% year on year, while Chevrolet and GMC deliveries climbed 13% and 23%, respectively. Also, Chevrolet’s all-electric Bolt EV marked its best first quarter ever, with sales jumping 60%, year on year.

Revenues in the North American segment came in at $25,957 million, higher than the year-ago quarter’s $25,831 million. Also, revenues from the unit outpaced the Zacks Consensus Estimate of $23,811 million. The segment’s operating profit increased 42.8% to $3,134 million. The segmental profit also outpaced the consensus mark of $1,917 million. The results marked an improvement, primarily owing to the newly-launched full-size SUVs, and improved pricing on pick-ups thanks to tight inventory and high demand for the same.

North American Market to Beef Up GM’s Q2 Results

General Motors’ strong and wining product portfolio in North America, led by its full-size pick-up trucks and SUVs, is likely to have performed well during the second quarter.

General Motors’ total sales in the United States during the June-end quarter came in at 688,236 vehicles, jumping 40% from the prior quarter’s sales. This performance was driven by solid customer demand for pick-ups and SUVs but slightly constrained by tight inventories amid the global semiconductor crunch.

During the second quarter, sales elevated across all four General Motors brands — Buick, Chevrolet, GMC and Cadillac.

Buick deliveries surged 86%, resulting in the brand’s best quarter in more than 15 years. This outperformance was fueled by stellar demand for the new Encore GX, revamped Envision, and Enclave, sales of which skyrocketed 184%, 97% and 103%, respectively.

Chevrolet sales climbed 31%, resulting in the best ever second-quarter sales, and best first-half sales for both Bolt EV and the Traverse. GMC deliveries rose 50% on the rising sales of Sierra LD and HD models, up 38 and 46%, respectively. In fact, it was the best second quarter and best first half since 2005 for GMC, aided by Yukon and Yukon XL. Chevrolet Silverado and GMC Sierra sales, combined, jumped 36%, with light-duty models posting robust segment share gains.

Cadillac’s second-quarter retail sales were at the best since 2015. Moreover, Cadillac’s total sales surged 55%, leading to the brand’s third consecutive quarter of year-over-year growth.

The efficiency of General Motors’ supply chain, purchasing, engineering and manufacturing teams, along with its well-connected suppliers and dealers network, boosted the automakers’ second-quarter deliveries and aided it to capture a niche in some of the rampant segments of the market.

The Zacks Consensus Estimate for second-quarter automotive revenues in the North American segment is pegged at $22,053 million, suggesting a surge from the $11,604 million recorded in the second quarter of 2020.  Remarkably, the consensus mark for the operating income from the said segment is pinned at $2,229 million, indicating a reversal of the loss of $101 million witnessed in the prior-year quarter. Importantly, the consensus mark for wholesale volumes in the said segment is 558,000 units, calling for a year-on-year jump of 68.6%.

We believe stellar revenues from the North American segment are likely to have bolstered General Motors’ second-quarter bottom line.

GM’s Overall Earnings & Revenue Projections for Q2

The Zacks Consensus Estimate for General Motors’ quarterly earnings is pegged at $1.89 a share, suggesting a whopping growth of 478%, year over year. Also, the Zacks Consensus Estimate for sales of $29 billion calls for a 72.9% increase on a year-over-year basis.

Investors should note that our proven model predicts an earnings beat for General Motors this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

General Motors — which shares space with auto biggies including Ford (F - Free Report) , Stellantis (STLA - Free Report) and Toyota (TM - Free Report) — currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.