Discussion Post
GM lost $806 million in the second quarter of 2020. Revenue fell by 47% relative to the same quarter in 2019. However, overall US vehicle sales are down by 34% relative to the second quarter of 2019. GM attributed the sales decline to lower demand due to the Covid-19 virus and also lower dealer inventories related to the two-month production shutdown earlier in the year.
GM's response has been to slash advertising spending and other discretionary spending. The automaker also "furloughed some employees and deferred compensation in an effort to weather the pandemic." CEO Mary Barra stated that GM makes swift and strategic decisions designed to ensure the firm's long-term success. GM stock fell by 3% after the earnings were released.
Article: "GM posts $806 million loss as pandemic dampens sales" by Matt McFarland.
Thinking Critically Questions:
• How is this large loss affecting GM's current operations?
• How will this loss affect long-term financial planning?
• How might the pandemic change internal policies on the firm's cash position?
The response should include a reference list. Using double-space, Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.