GM
#Over history, South America has been a very important business for us and has delivered strong performance.
We have a very strong product portfolio there and with a lot of model-year refreshes that are happening this year that are very, I will say, economically done from a capital deployment perspective.
We have a very strong distribution network.
I think the strongest dealer body when you look across the globe, the Chevrolet brand is incredibly strong.
So we have a very strong core business franchise in South America, and we think the team has done a very good job over the last couple years of really looking at the market conditions, taking costs out, again on all drivers.
It gets to the point that <UNK> made when we were talking about Europe.
We've run that play.
We've demonstrated success in South America of really looking at how to take costs out and how to drive and increase from a revenue perspective.
So we see that business as important.
Obviously, disappointing right now with the macroeconomic conditions that no one knows for sure how long they last, but they are lingering.
But we are well-positioned and have seen improvement in the first half of this year from the first half of last year, even in a more difficult macroeconomic environment.
So a very important business for us, and we know that it has huge potential as we move forward.
As it relates to technology, whether it's connectivity we've already deployed and we'll continue to grow that over the next couple of years, we will continue to also see what the receptivity is from an electrification perspective and from an autonomous perspective, but it will be customer-driven.
Clearly we have the technology and the capability to do it.
Relative to segment reporting, we have no plans at this time to change our segment reporting.
Obviously, that's something that we continuously evaluate as kind of the characteristics of the business changes.
So the quick answer is no on any change to segment reporting at this time.
I'm not going to give you kind of our fixed variable perspective on a go-forward basis.
I would say our real focus is to continue to maintain breakeven point in the US at a 10 million to 11 million SAAR.
And that is driven by variable profit improvement and the overall level of fixed cost.
I would say importantly when you look at costs, look at North America in either the second quarter or the first half of the year, factor in what we categorize as fixed cost versus the material performance, the commercial performance; cost performance is relatively flat.
And we grew our margins, which means that variable margins improved as well, and that is supportive of maintaining a low breakeven point.
So I kind of think about costs overall, both variable cost, especially the performance aspects of that, the commercial performance, against fixed cost increases.
Okay, first our expectations are we're going to have a very strong year.
We had a very strong first half.
And when I look at second half versus first half, the fundamental driver is seasonality, which is largely even pre-Brexit was a European issue.
We were shut down in Europe to a large extent in the third quarter, and then there's the holidays and Brexit.
Those are the two biggest factors of the second half versus first half.
North America had a great first half.
We expect North America to have a great second half, continued strength.
And again, our overall expectations, improved profitability year-over-year, improved margins, improved earnings-per-share, $6 billion of free cash flow, another record year.
And the performance that we generated in the first half is supportive of that, and that's why we took our guidance up as well.
Well, I think when we put together the alliance, it was built on four aspects.
One was we are already doing with Express Drive.
Two, the power of using the vehicles that have the capability that OnStar provides, that's already underway.
There is an opportunity to cross-market, and I think that's something we're just beginning to look at.
Clearly getting Lyft customers into our vehicles through Express Drive gives them exposure to the cars from a styling, from a technology, the whole value proposition that we have across our brands in GM products.
And then demonstrating autonomous capability in a sharing environment.
So those were the four pillars the alliance was on.
As I said, those are all on track and are accomplishing exactly what we intended to do.
Thank you.
Thank you, operator.
I want to thank everybody for participating on the call today.
I think if you step back and look not only this quarter but what we demonstrated over the last several quarters, we really have very strong earnings power in this Company.
And I think that demonstrates why GM is a compelling investment opportunity.
We know the industry well.
We know what comes with challenges and twists and turns, but we also know what comes with opportunities.
I think we have shown in this quarter and quarter after quarter that we have the right mindset and are holding ourselves accountable to overcome headwinds, to seize opportunities, and to meet our commitments with no excuses.
The leadership across the Company, which I'm very proud of, are pushing themselves to beat the targets we put in front of us.
They want to win and they want to continue to drive value for our customers and for our owners.
So we will continue to execute our plan with discipline to keep driving profitable growth, generating strong returns on invested capital, and creating shareholder value as we really focus on putting the customer at the center of everything we do.
So thanks again for your participation in our call today.
