GM Incurred $800 Million Loss For Second Quarter After Pandemic Hit Sales

American automaker General Motors reported a substantial $806 million loss for its second quarter, a period it described as the worst three months for the global automotive industry. Like other automakers in the United States, GM had been forced to shut down its factories and dealerships for most of the second quarter, resulting in a massive decline in supply and sales.

In its earnings report, which was released on Wednesday, GM reported a 34 percent drop in its overall vehicle sales in the United States. The company reasoned that tight dealer inventories, production shutdowns and supply chain disruptions caused by the pandemic were the main contributors to its poor performance during the period.

For eight out of the 13 weeks during the second quarter, GM had to shut down its factories in the United States. For its North American operations, GM only managed to lose around $101 million for the quarter.

GM's $806 million loss is a stark contrast to its $2.42 billion profit during the same period last year. However, the 50 cents per share loss was still better than average analysts' expectations of a $1.77 per share loss for the period.

For the second quarter, GM managed to rake in revenues of over $16.78 billion, which was a 52 percent drop from the $36.1 billion it generated over the same period last year. The company rapidly burned through its revenues for the period as it had to spend billions to cover pandemic-related costs.

Investors, who were mostly expecting a loss, still felt confident in GM's ability to recover. The company's shares remained relatively stable, moving up during premarket trading and then reversing course to a slight decline on Tuesday. On Wednesday, the stock dropped by a further 1.7 percent.

GM's chief executive officer, Mary Barra, acknowledged that the quarter was one of the most challenging periods that the company had ever faced. However, she assured investors that the company is in a good position to continue its recovery. The company's chief financial officer, Dhivya Suryadevara, echoed the sentiment and told analysts that GM is on track to make up to $5 billion in the coming quarters as long as the economic environment continues to be favorable.

The automaker is expecting to generate up to $9 billion in free cash flow throughout the remaining quarters of 2020, which it stated will be vital to its continued recovery. Suryadevara mentioned that GM should be able to completely pay off the $16 billion revolving credit line it drew in March.

Just like in the first quarter, GM did not release any new guidance for the rest of the year. The company likely still doesn't want to speculate too much on its prospects given the lingering uncertainties.