8 Takeaways From General Motors' Sell-Side Analyst Dinner

This week, Barclays analyst Brian Johnson attended a sell-side dinner hosted by General Motors Company GM CFO Chuck Stevens. In a new note, Stevens broke down 8 takeaways from the dinner:

• 1. Despite market fears that the U.S. auto market is peaking, GM management sees continued strength given a healthy U.S. economy.
• 2. Management sees a number of catalysts ahead for GM, including a product refresh in passenger cars, cost savings and growth opportunities in its aftersales business, OnStar, Maven and Cadillac.
• 3. GM may be able to up its cost-cutting target of $5.5 billion by 2018 given that the company is expecting $4 billion in cuts by the end of 2016.
• 4. GM is aiming to reduce lease penetration from the high 20 percent range to the mid 20 percent range.

Related Link: Oppenheimer Sees No Q2 Surprises From Tesla

• 5. GM is focusing its passenger car business on the global market and plans to shrink its U.S. passenger car footprint and free up 30 percent of its core capital for reinvestment and/or capital return.
• 6. GM’s variable profit per unit was higher in the first half of 2016 than the first half of 2015.
• 7. Management is confident that the company could dramatically reduce costs in the event of a downturn, including up to $4 billion in cost-cutting in a 20-25 percent industry decline.
• 8. GM believes its international business, particularly in China, will be the main source of continued earnings growth in coming years.

Barclays maintains an Equal-Weight rating on GM and a $36 price target for the stock.