As vehicle sales continue to recover amid the coronavirus pandemic, the demand for pickup trucks and SUVs is expected to rise, especially as an increasing number of consumers have begun to opt for personal modes of transport in lieu of public transportation. This emerging consumer behaviour shift has lead to General Motors outperforming Wall Street’s third quarter earnings expectations, while earning a 15% operating profit margin – the largest among all Detroit auto-manufacturers.
Gripped with the tailwind of growing demand for its SUV and pickup truck line, GM has announced new plans to expand production in Canada, investing up to $1 billion following a tentative contract with Unifor. Speaking to investors on Thursday, GM CEO Mary Barra announced the company’s latest plans to bring back pickup truck production to its Oshawa, Ont., assembly plant.
Up until now, the Oshawa facility was being used as a parts supplier to GM’s other manufacturing plants after vehicle production ceased in 2019. Now, construction of the new body shop and the flexible assembly module is expected to commence following the agreement closing.
The investment, which is expected to range between $1 billion to $1.3 billion, will provide hourly positions for up to 1,400 to 1,700 workers at the Oshawa, Ont. plant. Meanwhile, GM is allocating another $109 million towards its St. Catharines powertrain plant, and $500,000 towards operations at its parts distribution centre.
The profit from GM’s popular pickup trucks is expected to be allocated towards the company’s other, less profitable branches, including electric and autonomous vehicles. Since the pandemic lows of March, GM has been able to recoup all of its losses, largely hinging on the popularity of its pickup truck and SUV line.
Information for this briefing was found via GM. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.