Tuesday Ticker: General Motors adjusts to contract costs; Toyota offloads auto supplier shares

Toronto, Ontario ⁠— In this weekly Tuesday Ticker, General Motors changes some plans following some pricy labour contract costs, while Toyota and its affiliates offload a hefty number of shares in efforts to raise funds for electrification efforts. 

General Motors makes a U-turn

General Motors is scaling back its EV and autonomous vehicle efforts following its costly new labour contracts, which reportedly will ring up to US$1.5 billion more in labour costs, compared to 2019 contracts. 

Union contracts signed in the United States and Canada will reportedly cost the automaker approximately US$9.3 billion; even still, General Motors plans to buy back up to US$10 billion of its shares, while boosting its dividend by 33 percent. 

GM is cutting costs at its self-driving unit, Cruise, which has suspended all U.S. testing following a California crash that resulted in regulator-imposed ban on GM’s driverless vehicle testing operations. 

CEO Mary Barra said that, while she was “disappointed” by EV production this year due to battery assembly hiccups, she anticipates GM’s EV production to be “signficantly higher” with “improved profit margins” in 2024. 

The Canadian Unifor and American UAW union deals translate to about $575 per vehicle assembled over the life of the deals⁠, which extend through 2028. 

GM issued new guidance following negotiations; net income attributed to stockholders for 2023 was reduced to a range of US$9.1 billion to US$9.7 billion, compared to the previous outlook of US$9.3 billion to US$10.7 billion.

As of Monday at 11 a.m. E.T., shares of GM traded at US$33.11 per share on the NYSE; up two percent from market open, but down two percent year-to-date. 

Downloading Denso

Toyota and two of the OEM’s affiliates announced plans to divest about eight percent of their shares in automotive supply giant Denso last Wednesday; the automaker reportedly plans to use the free cash in its shift to zero-emissions vehicles.

Toyota, Toyota Industries and Aisin, all announced plans to sell their shares to investors last Wednesday. Collectively, the companies will sell more than 250 million shares worth approximately US$4 billion.

The deal will be Japan’s second-largest share sale of the year, and the largest in the global automotive industry in more than a decade.

Denso is the world’s second-largest maker of auto components; the company will repurchase about 125 million of its own shares on the open market, reported Reuters. 

Even with the sale, Toyota remains Denso’s largest shareholder. The OEM’s stake in the company sits at about 20 percent, down from 24 percent shareholder. 

Toyota Industries, Denso’s number-two shareholder, would see its stake drop to around six percent, down from ten percent. Aisin’s shares would be reduced completely, said Reuters.

As of Monday at 11 a.m. E.T., shares of Toyota traded at ¥2,768 (CAD$25.47) per share on the Tokyo Stock Market; down two percent from market open. On the NYSE, Toyota shares traded at US$187.45 per share, down 2.6 percent from market open. 


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