The good news for General Motors should continue for a while, its former vice chair, Bob Lutz, told CNBC on Friday.
The largest U.S. automaker said Friday its full-year 2018 earnings will exceed previous expectations and that 2019 is looking even better. GM shares closed up 7 percent on the news.
“The product pipeline is full. It’s fresh. It’s all in the right part of the market,” Lutz said on “Closing Bell.”
“Unless we have some sort of economic Armageddon, either here or in China — which I don’t think anybody expects — I think the company is exceptionally profitable right now and will continue to be so for the foreseeable future.”
Earlier in the day, CEO Mary Barra told CNBC’s Phil LeBeau, “From a 2018 perspective, it is not only a focus on really capitalizing on the new trucks we have out there, the light-duty trucks, but also the focus on cost reduction so it was across the board. Every element of the company.”
The company announced several plant closures and 14,000 job cuts in November, which is expected to save about $6 billion by the end of 2020.
Lutz said those “unpopular” choices were necessary for the company to improve earnings.
While nobody likes plant closings, it is a fact of life in the auto business because those plants get outdated and are producing vehicles that are no longer in demand, he explained.
“It’s sad. It’s the downside of a market economy. But if you don’t do it, companies die. And nobody benefits from that either,” Lutz said.
The company’s focus now is on crossover vehicles, rather than passenger cars, which Lutz called “loss generators.”
He also thinks the Detroit automaker is best positioned to take advantage of new technology, noting it has a lot of expertise in electric and autonomous vehicles.
“General Motors sees the autonomous and electrification future coming and they’ve got the cash and the wherewithal to be a big player.”
GM is projecting more than 17 million total U.S. vehicle sales in 2019.
– CNBC’s Robert Ferris contributed to this report.
