General Motors Company (NYSE:GM) Q4 2022 Earnings Call Transcript

Emmanuel Rosner: Thank you so much. Two fairly quick ones, first one is back on pricing. I think you said you’re trying to be conservative in your assumptions. So I was just hoping you could be a little bit more specific or explicit around what sort of incentive environment you’re assuming, because I understand the MSRP going up, just not super clear from the outside, what sort of macro and/or industry environment you’re assuming and the impact on the overall industry incentives?

Paul Jacobson: Yes, hey Emmanuel, so nothing specific to guide on in terms of our forward incentives beyond. We do expect over time for incentives to increase from the sort of record low levels that we’ve seen. We’ve seen slight upticks, but I would say that’s largely more of a function of interest rates than it is waning demand or inventories. Inventories still remain very tight. We expect that to be the case, especially grounded inventory at dealers through 2023. So while we see some normalizing of incentives, nothing more specific than that, that we’ll guide to.

Emmanuel Rosner: Okay. So then just affirming in terms of macro environment, if that’s okay. Are you assuming some sort of recession in the second half impact on sort of like consumer demand for vehicles or are you assuming sort of current conditions continue? And then I just have a follow-up on free cash flow.

Mary Barra: Yes. So again, this is a situation we’re watching carefully. But what we see from a new vehicle consumer is a consumer, as Paul said, even in the month of January we’ve seen it to be very strong. So we’re going to continue to monitor that and take the necessary steps. But we’re going to watch and learn as we go through the year. We told you at Investor Day, we were going to be conservative as we plan this year, but also position ourselves to take advantage of whatever the market ends up being, and we’re still on that plan executing. But again, from an early read in January, it’s pretty positive.

Emmanuel Rosner: Okay. Thanks for that. And then just quickly on free cash flow. Can you just provide a high-level walk between the 2022 strong performance in 2023? Because obviously, the two sort of elements you would exclude to make them comparable the pension income, this is noncash, right? So yes, walk between 2022 and 2023 would be helpful.

Paul Jacobson: Yes, just really high level, $10.5 billion in 2022. At the midpoint, we’ve got a couple of billion dollars more of CapEx going forward and probably not as much of a working capital build as we saw in 2022. That’s high level how you get to the 5 to 7.

Emmanuel Rosner: Great. Thank you so much.

Mary Barra: Thank you.

Paul Jacobson: Absolutely.

Operator: Thank you. I would now like to turn the call over to Mary Barra for her closing remarks.

Mary Barra: Great. Well, thank you, Michelle, and thanks to everyone for your questions. We, at General Motors, are really excited about the opportunities ahead of us in 2023, especially with all the new vehicles that we’re launching. Chevrolet and GMC will build on their leadership in pickup trucks and Chevrolet is giving customers around the world compelling entry-level products too. And this is the breakout year for the Ultium platform. So when you look at the products we’ll have by the end of this year, again, they’re all outstanding. Again, we expect another year of strong financial results and our confidence reflects the determination of the GMT — of the GM Team, the strength of our vehicles we’re delivering and the valuable relationships we’ve developed with our dealers, our suppliers and our other partners.