Yahoo Finance Live’s Brian Sozzi recaps Wednesday’s ‘Morning Brief’ and discusses the expectations for the 2023 New York International Auto Show taking place at the Javits Center in New York City from April 7-16. The team also discusses GM's announcement that 5,000 workers accepted a buyout amid cost cutting.
Video Transcript
BRAD SMITH: Shifting gears into the New York City Auto Week as some of the top executives in the industry are right in their own backyard. Brian Sozzi and Pras Subramanian got a chance to sit down with GM CFO Paul Jacobson fresh off of his announcement that General Motors would be saving about $1 billion in costs thanks, in part, to 5,000 workers accepting buyouts. You can read all about this in today's Morning Brief written up by, hey, that man right there, Brian Sozzi. Up now on the Yahoo Finance homepage.
But for more, let's bring in Brian Sozzi himself. There goes that man again.
BRIAN SOZZI: A tough gig eating some steak and talking about cars during Auto Week. But yeah, we got a chance, myself and Pras, our senior auto correspondent, talked to GM CFO Paul Jacobson. It was a brief or a small media roundtable. Really peppered him with a lot of questions.
A couple of things that stood out to me in this lunch here, guys. Jacobson saying that or acknowledging that GM is, in fact, a show-me story. And that comes after me asking him, Paul, why is your stock essentially only trading at about a 5 and 1/2 times earnings? You can go to Yahoo Finance. Go to the GM ticker page. Go on the stats page, and you can see that multiple. Really trading well below-- well below the broader market.
And he says you just have to focus more on driving efficiencies. And to that end, you saw that news yesterday that 5,000 workers are, in fact, taking buyouts. About a billion dollars in costs are going to come likely out of this business.
And then I followed this up because we have been really tracking the progress at Ford fresh off its investor day about two weeks ago. They're breaking up or breaking out how their businesses are presented to investors, an EV business and then that internal combustion and engine business to better, I think, show investors the profit potential from EVs and the core gas-powered business.
Paul is telling us he's not going to do that. You know, they are focused much more, I think, on cutting costs on the overall business. You're really now seeing a philosophical difference emerge, at least in terms of how earnings and financials are presented, between a GM and Ford, and investors are going to have to decide which company and which presentation do they like more.
JARED BLIKRE: Let me ask you here, what's the difference between those mindsets between GM and Ford and how you see them playing out in the future? For instance, Ford kind of acknowledging that maybe there are inherent differences in between the ICE motor, between the EV motor, and maybe there aren't that many synergies. Maybe this is a value unlock for the future, another IPO. Whereas GM is saying, no, we're going to do this under the same umbrella. Do you think it extends that far, if it's that encompassing?
BRIAN SOZZI: One thing I'm appreciating more as I talked to these auto executives, how complicated this transition is to electric vehicles. And I do think Ford has done a good thing here splitting up its businesses.
Let's keep in mind, these are different components for these vehicles. This is even a different workflow for the workers. And then you have to think about, well, how do you allocate their time? Should they have more time spent on developing electric vehicles or more time spent coming up with the next great gas-powered vehicle?
I think Ford is on to something here. But again, that's not to say that GM can't come out here over the next couple of years and produce good margins.
I will add this, though. Paul mentioning Tesla in our conversation. Ford has mentioned that as well. Both of these companies are really locked in on trying to produce the same operating margins as of Tesla. They are just really focused on it. Unclear if they can get there because, of course, they're legacy automakers still dealing with really high payrolls of union workforce. Tesla doesn't have that.
JARED BLIKRE: Yeah, the margins at Tesla still really trouncing the competition there. Thank you for that, Brian Sozzi.
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