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The Story behind GM’s Rising Revenues in 2016

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General Motors

In this series, we’ve already discussed how General Motors’ (GM) Chevrolet brand sales have fallen in the first three fiscal quarters of 2016. But during this period, the company’s revenues witnessed handsome YoY (year-over-over) growth. Let’s take a closer look.

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Uptrend in revenues

In 1Q16, GM’s revenues stood at $37.3 billion, which was 4.3% higher than its $35.7 billion in 1Q15. This positive growth in revenues was primarily driven by higher retail vehicle sales in North America, mixed performance in China, and improvements in European auto demand.

In 2Q16, the company’s revenues came in at $42.4 billion, which reflects an 11.1% rise over its $38.2 billion 2Q15. This positive growth in revenues for the quarter was due to continued strength in retail vehicle sales in North America and continued improvements in Chinese and European market performance.

Similarly, GM’s 3Q16 revenues stood at $42.8 billion, which represents a rise of 10.2% over its $38.8 billion in 3Q15. This positive revenue growth was also supported by the continued strength in the company’s retail vehicle sales in North America and higher sales of heavyweight vehicles.

Currency headwinds

Meanwhile, unfavorable currency movements have hurt GM’s revenues in the first three quarters of 2016. In 2016 so far, currency headwinds have stolen about $1.2 billion, $1.0 billion, and $0.4 billion from GM’s revenues each quarter, respectively. This means that the company’s first nine months’ revenues have totaled $125.1 billion, which, excluding currency headwinds, represents a 10.9% rise.

Like GM, Ford Motor (F) has also faced currency headwinds due to the stronger US dollar. By contrast, the weaker Japanese yen and euro have continued to favor auto giants (XLY) like Toyota Motor (TM) and Fiat Chrysler Automobiles (FCAU) during the same period.

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