Leading automaker General Motors (NYSE:GM) is eliminating hundreds of executive-level and salaried jobs globally to reduce costs. The job reductions are in the “low hundreds,” Reuters reported. However, the company called these headcount reductions attrition and not layoffs.
According to the Detroit News, a General Motors spokesperson said, “Today’s action follows our most recent performance calibration and supports managing the attrition curve as part of our overall structural costs reduction effort.”
General Motors’ Cost Reduction Efforts
During the company’s Q4 2022 earnings call in January, CEO Mary Barra stated, “I do want to be clear that we’re not planning layoffs.” Barra said the company is targeting $2 billion in cost savings in its automotive business over the next two years. She clarified that the company aims to reduce complexity in all its products and corporate overhead expenses but does not intend to lay off employees to cut costs.
“We are limiting our hiring to only the most strategically important roles and we will use attrition to help manage overall headcount,” said Barra.
General Motors had about 86,000 hourly employees and nearly 81,000 salaried employees as of the end of 2022. “Hundreds” of job cuts indicate a very small percentage of the overall headcount. Earlier this month, rival Ford (NYSE:F) announced that it was eliminating 3,800 jobs in Europe over the next three years to streamline its operations and reduce costs.
Both General Motors and Ford are investing billions in expanding their presence in the lucrative EV space. General Motors expects its 2023 capital expenditure in the range of $11 billion to $13 billion. “We continue to shift resources to EVs with around 75% of our product specific capital dedicated to EVs and AVs [autonomous vehicles],” said CFO Paul Jacobson during the Q4 earnings call.
Is GM a Good Stock to Buy?
Wall Street’s Moderate Buy consensus rating for General Motors is based on seven Buys and four Holds. The average GM stock price target implies about 38% upside potential. Shares have advanced 15% so far in 2023.
