Welcome to the Daily 5 report for Tuesday, Jan. 28.
It's rare for a year-end General Motors earnings report to generate kudos from both Wall Street and the UAW. With record annual profits reported today in North America you would think both would be happy, but so far, there isn't much love to be found.
As our story today by Lindsay VanHulle reports, the automaker finished with quarterly adjusted earnings surging 43 percent to $2.5 billion on revenue that rose 11 percent to $47.7 billion.
In the hype you see from the financial media, GM reported a "beat" — exceeding analyst expectations. CNBC was live with Mary Barra at 7:35 a.m. EST to talk about it. After an initial boost in premarket trading, GM shares fell 9 percent to close the day at $50.04.
Analysts issued lukewarm reactions about GM's 2025 forecast with potential Trump tariffs weighing on their minds: "A materially stronger than expected 2025 outlook may be reasonably achievable but could be seen by investors as a 'bull case' given the guide is based on an 'unaffected' tax, tariff and regulatory environment in FY25," Morgan Stanley analysts wrote in their report today.
GM generated a record annual North American profit of $14.5 billion, which translates into an average profit-sharing bonus of $14,500 for UAW rank-and-file workers. Typically, the UAW quickly issues a statement taking credit for the results and thanking members for a job well done. By early afternoon, there was no statement, just this posting on X.
Tomorrow, we'll get fourth-quarter and annual financial results from Tesla Inc. If you have been wondering how CEO Elon Musk can find time to restructure the federal government running President Donald Trump's Department of Government Efficiency — and still run Tesla, not to mention SpaceX and X — you aren't the only one. Tesla investors would like to know, too, according to our story today by Laurence Iliff.
"How is having a position in the White House going to affect the time spent with Tesla?" asked one investor in advance of Wednesday's earnings report. "How will Tesla manage with a part-time CEO?" asked another.
Catching up with some of the many reports that came out last week at the NADA Show, Gail Kachadourian Howe reports today that the average U.S. dealership is expected to have a 2 to 2.5 percent return on sales over the next 10 years, a slight drop from current levels.
Glenn Mercer, president of Cleveland consulting firm GM Automotive, conducted the dealership profitability study for NADA. Mercer estimated dealerships' return on sales currently is 3 percent, lower than during the COVID-19 pandemic and microchip shortage, when it ranged from 4 to 6 percent.
Meanwhile, we're still catching up with all the implications of the U.S. 5th Circuit Court of Appeals ruling late Monday that tossed out the Federal Trade Commission's beefed-up regulations on car dealership sales. We'll have a lot more to come on this story tomorrow.
And finally, did you get a look at the spy photos of the upcoming redesigned Toyota RAV4 compact crossover? This is Toyota's bestselling vehicle in North America, so it can't be messed up. See the spy photos here in Larry P. Vellequette's story.
That's it for now. Have a great rest of your day.
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— Philip Nussel, online editor
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