Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

General Motors (GM) Suspends '20 Outlook On Coronavirus Scare

Published 03/25/2020, 07:15 AM
Updated 07/09/2023, 06:31 AM

General Motors (NYSE:GM) withdraws 2020 guidance citing the uncertainty caused by the coronavirus pandemic. The auto giant intends to drawdown approximately $16 billion from its revolving credit facilities, which would be used to deal with the downturn caused by production shutdowns

It is a constructive step to boost the firm’s cash position and preserve financial flexibility in the face of rising global market uncertainty due to the coronavirus-induced crisis. The borrowed funds will be in addition to the company’s current cash reserve, which it estimates to range from $15-$16 billion as of the end of March.

In addition, the company’s GM Financial (GMF) arm is highly liquid and capitalized. GMF had $24 billion in liquidity at the end of 2019 and expects similar liquidity rates at the end of first-quarter 2020. The liquidity level is aimed at meeting cash requirements of at least six months, including new originations, without exposure to the capital markets.

Moreover, General Motors is providing new vehicle financing programs to spur demand during such uncertain times, which is denting consumer confidence and slowing dealer-showroom traffic. GMF is offering 0% financing for seven years –– two years more than recent programs and four months deferred payments for those with A+ credit.

Further, General Motors has temporarily shut all U.S. factories at least until Mar 30 to contain the spread of coronavirus, and will evaluate the situation on a weekly basis after that.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Meanwhile, General Motors is also collaborating with Ventec Life Systems to boost the production of respiratory-care products to fight against the COVID-19 pandemic. The car giant will lend its logistics, purchasing and manufacturing expertise to ramp up the manufacture of critically-important ventilators.

Apart from General Motors, the rapidly-spreading coronavirus pandemic has become a concern for other global auto biggies as well. Companies including Ford (NYSE:F) , Cummins (NYSE:CMI) , Superior Industries (NYSE:SUP) , Oshkosh, Navistar and PACCAR (NASDAQ:PCAR) have also withdrawn their 2020 guidance. Several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nation-wide campaign addressing the crisis. The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Ford Motor Company (F): Free Stock Analysis Report

Cummins Inc. (CMI): Free Stock Analysis Report

Superior Industries International, Inc. (SUP): Free Stock Analysis Report

General Motors Company (GM): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.