GM is surging after giving strong guidance, saying it would use Cadillac to compete with Tesla

Rebecca Cook/Mary BarraGeneral Motors Chairman and CEO Mary Barra speaks at GM’s press conference at the North American International Auto Show in Detroit, Michigan, U.S., January 16, 2018.

General Motors was rallying Friday, up more than 9%, after the company gave strong 2019 guidance and said it would use its Cadillac brand to take on Tesla.

Friday’s gains have GM shares trading near $US37.50, and at their best level since the beginning of December. A close above $US38.45 would be the highest since late July.

After four years of record or near record US sales of about 17 million vehicles, GM said Friday it expects 2019’s numbers to be in that range, and that it sees the Chinese market holding up with about 27 million sales. It estimates full-year earnings of between $US6.50 and $US7 per share – ahead of the $US6 Wall Street consensus. The rest of the auto industry is entering a defensive position for the year. Alongside its bullish guidance, GM said it would use its Cadillac brand to compete with Tesla in the electric-vehcle market.

In November, the automaker announced a restructruing plan which included shutting down seven plants globally in 2019, including three assembly plants in North America, two US transmission plants, and two additional, unnamed assembly plants outside the US. GM also said it would slash its salaried employee headcount by 15%, including a 25% cut in its white-collar staff.

“We look for essentially 100% of any savings to be reinvested in remaining products,” Morgan Stanley analyst Adam Jonas said at the time. “We see these steps as necessary to ensuring the long-term sustainability and independence of GM as a leader in Auto 2.0 and a significant employer of US labour.”

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