Adam Jonas forecasting FCA will surpass GM in Auto profits

[AlexB]

First it was Challenger beating Camaro, then the RAM beating Silverado in Q3 , now it's the crown jewel of FCA beating GM in Automotive profit in 2019:

Yet the company’s bottom line isn’t as robust, and Jonas expects GM to have “materially lower” adjusted earnings before interest and taxes (EBIT) and earnings per share in 2019 than it did in 2011. Eight years ago he saw the company notching EBIT of $12.6 billion, while today his 2019 forecast is for $7.9 billion, a decline from this year’s levels.

Adam Jonas is the Auto analyst at Morgan Stanley.

For comparison FCA EBIT forecast for 2018 is $7.5-$8 billion Euros which in U$D comes out to a range of $8.6 billion-to-$9.2 billion United States dollars. FCA will likely target $10 billion Euros in EBIT for 2019.

Base on Adam's forecast, GM truck lunch is one of the weakest ever, and GM will start to get hit by declining Chinese Vehicle sales,higher material prices as GM's financial hedging (buying steel,etc in advance) inventory starts rolling off.

Adam's main bull case for GM stock soley rest on the idea that GM's Autonomous business will get spun off (spin-off) into a seperate publicly traded company (think CNH).
https://www.barrons.com/articles/gm-has-gone-nowhere-since-its-2010-ipo-1538751977

 

[Ryan]

That's very good. GM's cost cutting is catching up with them.

 

[redriderbob]

No doubt. GM is still spending a ton of money on passenger cars here in NAFTA errrr USMCA and the market keeps shrinking and Ford and FCA have already backed out. The only companies I see selling a lot of sedans is Dodge (Charger because of performance and law enforcement), Toyota, KIA, and Hyundai. Honda sales have even been in the toilet compared to what they used to be and the new Japanese design Accord has not been a success at all, compared to the American designed ones in the pass.

Cadillac is still launching new sedans with their luxury sedan sales dropping fast. Buick's number one selling vehicle is subcompact Encore. GM is getting rid of the Impala, but its still pouring money into electric small cars. Yes, the Volt will be gone but they plan on building a bunch of new electric vehicles.

https://insideevs.com/within-18-months-gm-will-launch-two-new-electric-cars-based-off-bolt-tech/

While people complain FCA releases new product slowly, its because they are making tons of profit with older vehicles that are well paid off.