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GM Boosts 2026 Outlook on Premium Pricing for Big Trucks · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: or watch us live on YouTube.
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  Speaker 2: David Welsh, he is our Bloomberg Detroit Bureau chief, and
• 0:26
  Speaker 2: we'll talk about General Motors's earnings. But I was checking
• 0:29
  Speaker 2: out Canada's exports to the US, and energy is number
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  Speaker 2: one on the list one hundred and sixty billion Canadian
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  Speaker 2: dollars worth of exports to the US and twenty twenty
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  Speaker 2: five number two is motor vehicles and parts at seventy
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  Speaker 2: four billion Canadian dollars. What's the thinking in Detroit when
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  Speaker 2: the President threatens tariffs on Canadian products?
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  Speaker 3: Generally speaking, in Detroit, the car companies worry about this
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  Speaker 3: because they've got long standing manufacturing There A want a
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  Speaker 3: big Canadian hearts suppliers too. Magnet is big, Martin Ray
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  Speaker 3: is another one that's a good sized company. They send
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  Speaker 3: a lot of parts over the border very quietly. Toyota
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  Speaker 3: makes a lot of vehicles in Ontario and Ford and
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  Speaker 3: General Motors still have production over their soda Stilantis. So look,
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  Speaker 3: the car companies don't like anything that really is going
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  Speaker 3: to upset their supply chains anymore than it already has.
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  Speaker 3: Mexico has already been a big deal for them and
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  Speaker 3: certain parts of Asia as well, So they'd rather see
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  Speaker 3: the status quo remain in place and hope it does here.
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  Speaker 3: In fact, the car companies generally want to see us
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  Speaker 3: MCA remain is similar to what it's been since Trump
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  Speaker 3: set it up, what five six years ago to begin with,
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  Speaker 3: But that's not gonna be the case. But they have
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  Speaker 3: been fighting to sort of claw back some exemptions to
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  Speaker 3: that and reduce their cost That's why General Motors. One
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  Speaker 3: of the reasons General Motors had better earnings today is
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  Speaker 3: they've managed to lobby their way into at least a
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  Speaker 3: little bit of a reprieve on these tariffs.
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  Speaker 4: And I'm looking at the gym results here. This is,
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  Speaker 4: you know, right back to their playbook, which is I
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  Speaker 4: mean they boost their twenty twenty six alib due to
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  Speaker 4: premium pricing on big trucks. Boy, that is America auto
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  Speaker 4: industry today. Premium pricing big trucks SUVs. That seems to
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  Speaker 4: be working for certainly Forward here, I mean gim.
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  Speaker 3: Well, it's working for all of them really a couple
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  Speaker 3: of things. So, yeah, they're charging a lot of money
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  Speaker 3: for their big vehicles. Now, we did, actually I will
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  Speaker 3: say this, we did see some discounting on pickup trucks.
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  Speaker 3: As you know, the competition is always tough in that segment,
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  Speaker 3: and you've got high fuel prices that I think is
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  Speaker 3: keeping some buyers on the fence for a while. So
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  Speaker 3: you know, there's a bit of that going on. But
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  Speaker 3: GM's average vehicles selling for fifty two thousand dollars, and
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  Speaker 3: you know that's an expensive vehicle, so they are they're
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  Speaker 3: keeping price up. That's one of the things I'm doing
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  Speaker 3: well for them. We've we talked about terrorf relief. They
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  Speaker 3: have lower warranty costs. That's helping them as well. The
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  Speaker 3: other thing too, to keep an eye on. They've been
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  Speaker 3: boosting production. They had pretty lean inventories throughout the second quarter,
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  Speaker 3: so some of this is that they're just kind of
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  Speaker 3: putting more into the channel to their dealerships. And now
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  Speaker 3: GM says it's sustainable and that they seek similar momentum
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  Speaker 3: into twenty twenty seven or twenty six and twenty seven.
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  Speaker 3: But they've got to deliver on that otherwise, you know,
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  Speaker 3: they're building inventory and they may have to pull back
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  Speaker 3: at some point.
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  Speaker 2: Okay, So GM and FOR they're all doubling down on
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  Speaker 2: these big premium trucks. What does the carmaker strategy look
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  Speaker 2: like when it comes to hybrids, when it comes to evs,
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  Speaker 2: Because my understanding is there was another charge related to
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  Speaker 2: a reduced production of evs.
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  Speaker 3: That's right, And what that charge is, it's basically for
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  Speaker 3: stuff they've already announced, but they've had to pull back
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  Speaker 3: production on the batteries they make for the evs, and
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  Speaker 3: they've had to pull back on production of the electric
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  Speaker 3: vehicles themselves. They're retooing a plant in suburban Detroit that
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  Speaker 3: they thought was going to make electric pickup trucks. But
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  Speaker 3: nobody buys electric pickup trucks. They don't buy gms, they
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  Speaker 3: don't buy fours, they don't buy tessels, they don't buy rivians.
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  Speaker 3: No one wants an electric pickup truck. So right, so
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  Speaker 3: right now we are seeing are these charges coming through
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  Speaker 3: the system, and GM has taking a total of eleven
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  Speaker 3: billion in charges there like they haven't canceled a single
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  Speaker 3: electric vehicle in that lineup. They still sell a dozen
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  Speaker 3: different evs and that's their strategy. They don't have any
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  Speaker 3: hybrids on the market now except for the E Ray,
• 4:34
  Speaker 3: which is a Corvette very well volume. They say they're
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  Speaker 3: going to have a handful of them coming. Mary Borrow
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  Speaker 3: told Bloomberg TV that but not on the market yet.
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  Speaker 3: Ford only has a couple of Stilantes, very little presence
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  Speaker 3: there right now. That's a Hyndai in Toyota and two
• 4:48
  Speaker 3: degree Honda Game, and they're good. All three of them
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  Speaker 3: are getting good sales gains in the US market because
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  Speaker 3: they've got hybrid electric vehicles at a time when gas
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  Speaker 3: is selling from more than four bucks.
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  Speaker 4: Stay with us.
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  Speaker 2: 's more from Bloomberg Intelligence coming up after this.
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  Speaker 4: Well here this is the story that just won't die.
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  Speaker 4: Paramount Skydance, I'm not even used to calling it that,
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  Speaker 4: but whatever, Warner Brothers Discovery, Paramoun wants to buy him
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  Speaker 4: the federal regulator said, okay. The state said, whoa, whoa
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  Speaker 4: wa wait up here, We've got some problem. And looking
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  Speaker 4: it looks like they're going to hold off this deal
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  Speaker 4: at least temporarily. This is Paramounts Guidance taking over a
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  Speaker 4: Warner Brothers Discovery.
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  Speaker 5: Wow.
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  Speaker 4: Chris Palmary joins his here, senior editor and Entertainment team
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  Speaker 4: leader for Bloomberg News. He's based out there in LA
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  Speaker 4: with all those folks, but he's here in the greatest
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  Speaker 4: city in world, New York. Chris, Thanks so much for
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  Speaker 4: joining us here. The States are blocking the Paramounts Guidance
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  Speaker 4: murder or acquisition of Warner Brothers Discovery. Can they do that?
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  Speaker 5: Apparently?
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  Speaker 6: Yes, very mad they can get a judge to do that.
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  Speaker 4: Yeah. And you know, we've seen this a couple of instances.
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  Speaker 6: We saw, you know, the States get together and go
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  Speaker 6: around a Department of Justice deal with Live Nation, remember
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  Speaker 6: and themal Ticketmaster thing. So so yes, they do have
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  Speaker 6: this power and they're using it. This is seen as
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  Speaker 6: sort of like antidote to a very sort of relaxed
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  Speaker 6: Trump administration merger and acquisition policy.
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  Speaker 4: So at the very least three they've got some I
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  Speaker 4: guess a temporary streaming order. Is that what they have
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  Speaker 4: here correct? And that's going to delay the deal for
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  Speaker 4: a couple of weeks.
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  Speaker 6: Right, So right now they can't close the deal until
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  Speaker 6: August third. There's another hearing August third that will be
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  Speaker 6: determining whether that injunction don't close. The deal goes until
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  Speaker 6: there's a verdict in this case, so potentially pushing it
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  Speaker 6: through next year, which would be very bad for Pairmount.
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  Speaker 4: Yes, and now the I guess the seller here said
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  Speaker 4: there's probably some risk when we were negotiating this deal
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  Speaker 4: that something would happen, and so we negotiated a ticking
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  Speaker 4: feeh what's that.
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  Speaker 6: Seven million dollars a day that paramount must play Warner
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  Speaker 6: Brothers shareholders if they fail to close by the end
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  Speaker 6: of September. Okay, wow, And so that adds up to
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  Speaker 6: more than six hundred million dollars a quarter.
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  Speaker 5: Okay, holy all.
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  Speaker 4: Right, So that again, that's you put that on the
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  Speaker 4: deal if you think there's a material risk that for
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  Speaker 4: whatever reason, it won't get approved, and so you got
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  Speaker 4: to really put the onus on the buyer to make
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  Speaker 4: sure it does get approved. What's the feeling in Hollywood
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  Speaker 4: is this deal going to go through. Can it really
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  Speaker 4: be blocked?
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  Speaker 6: Well, yeah, we're going to do that sort of a
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  Speaker 6: Hollywood version in the I think wall Street has largely
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  Speaker 6: bet that that he's going to get.
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  Speaker 5: This deal done.
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  Speaker 4: Okay, Okay, he being Ellis David Allison, who is the
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  Speaker 4: CEO of.
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  Speaker 6: Whose father is one of the richest contents. Well, so
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  Speaker 6: that helps, and how there's certainly people think it's going
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  Speaker 6: to happen who've sort of resigned to the fate.
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  Speaker 4: But they're very not happy about it.
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  Speaker 6: I mean, we've seen the Writers Guild actually sue to
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  Speaker 6: try to block the deal. We've seen very strong statements
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  Speaker 6: from other unions. Uh, you know the rank and file
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  Speaker 6: person in Hollywood who's never a happy person in general. Right,
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  Speaker 6: it's a tough business. It sees this for for what
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  Speaker 6: it is. There's going to be massive consolidation. There's going
• 8:24
  Speaker 6: to be layoffs. Uh, there's going to be one bigger
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  Speaker 6: conglomerate that they have to answer to. Uh, you know
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  Speaker 6: for pitching stories, you know, pitching movies and TV shows
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  Speaker 6: and things like that, jobs, all of that. It's it's
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  Speaker 6: it's it's going to be it's going to be difficult,
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  Speaker 6: and it's already been a difficult market, particularly in Los
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  Speaker 6: Angeles in the film business. A lot of jobs moving overseas,
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  Speaker 6: a lot of cutbacks, and the threat of AI. It's
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  Speaker 6: not a happy time there.
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  Speaker 4: So I mean, in reality, I mean, you think about it.
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  Speaker 4: You're putting two studios to get our Paramount and Warner Brothers,
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  Speaker 4: two of the largest studios in the business. It's almost
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  Speaker 4: like redund I mean, do I need this stage manager
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  Speaker 4: on this studio if I've got one across the street
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  Speaker 4: on the other, you know, I.
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  Speaker 6: Mean yeah it well, and not just the two studios,
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  Speaker 6: but two streaming services Paramount Plus and HBO Max, and
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  Speaker 6: two giant cable network operations, I mean everything from CNN
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  Speaker 6: to MTV, so a lot of redundancies. Paramount's argument is
• 9:23
  Speaker 6: that they're going to run Warner Brothers in Paramount studios separately,
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  Speaker 6: separate lots, separate management teams. They said they're going to
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  Speaker 6: have thirty movies a year they're releasing specifically for theaters,
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  Speaker 6: which is higher output than they've had historically the two
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  Speaker 6: companies separately.
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  Speaker 4: We'll see if that all happens. That's the promises.
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  Speaker 5: Now.
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  Speaker 6: The question is, you know, when they do this deal
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  Speaker 6: they've got eighty billion in debt. You know, the cable
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  Speaker 6: networks are losing viewers and advertisers and very rapid clip
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  Speaker 6: If things really get difficult, how how can they keep
• 9:55
  Speaker 6: all of that operations up?
• 9:56
  Speaker 4: Is there a chance that they walk away from this?
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  Speaker 5: Parent?
• 10:01
  Speaker 4: Sky Instant says it's just too much. I have a
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  Speaker 4: hassle here. What's the company been saying?
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  Speaker 6: Well, no, that's not what they're saying publicly. But look
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  Speaker 6: at this math seven billion dollar breakup fee if the
• 10:13
  Speaker 6: deal doesn't go through, whether it's their choice or a
• 10:16
  Speaker 6: court's choice. And that's on top of the two point
• 10:19
  Speaker 6: eight billion they've already paid Netflix to walk away, So
• 10:22
  Speaker 6: that would be close to ten billion sort of probably
• 10:25
  Speaker 6: considering all the lawyer's fees and all that ten billion
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  Speaker 6: that the Ellisons have spent on this quest that potentially
• 10:32
  Speaker 6: could get them nothing.
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  Speaker 4: Wow, it just goes I mean, you've been in this
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  Speaker 4: business a long time. I've been in this business long time.
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  Speaker 4: Hollywood is a tough place to do. Deals they just
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  Speaker 4: buy and large don't work.
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  Speaker 5: Well.
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  Speaker 4: Just look at the history of Warner Brothers.
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  Speaker 6: How many owners as it had in the last fifteen years, and.
• 10:49
  Speaker 7: How has it ended stay with us. More from Bloomberg
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  Speaker 7: Intelligence coming up after this. You're listening to the Bloomberg
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  Speaker 7: and Religion's podcast. Catch us live weekdays at ten am
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  Speaker 7: Eastern on Apple Coarclay and Android Auto with the Blueberg
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• 11:09
  Speaker 7: or watch us live on YouTube.
• 11:11
  Speaker 4: Through Speaking of real Estate, perfect timing. Scott Reclord joints
• 11:15
  Speaker 4: us here. He's the CEO and chairman of our x R.
• 11:17
  Speaker 4: Joining us here in studio. Scott, thanks so much for
• 11:19
  Speaker 4: coming back.
• 11:19
  Speaker 5: It's going to be here. Thanks Paul.
• 11:21
  Speaker 4: New York City office market give us an overview. How
• 11:24
  Speaker 4: are things out there these days? It seems like it's
• 11:26
  Speaker 4: coming back in a big way, but it gives the details.
• 11:29
  Speaker 5: It's more than back.
• 11:30
  Speaker 8: I mean, I've been in this business for thirty years
• 11:32
  Speaker 8: and i have not seen the New York office market.
• 11:35
  Speaker 5: Is as strong as it is today.
• 11:37
  Speaker 8: If you look at leasting for the first six months,
• 11:39
  Speaker 8: it was twenty three million square feet. If you think
• 11:42
  Speaker 8: that carries through this year, it will take us back
• 11:44
  Speaker 8: to levels that we haven't seen since two thousand. Rent
• 11:47
  Speaker 8: growth has been extraordinary, the fastest in the country. You know,
• 11:51
  Speaker 8: there's still a flight to quality. So you've seen the
• 11:53
  Speaker 8: higher quality buildings are really really doing well. But when
• 11:56
  Speaker 8: you take like the top fifty buildings, the vacancy rates
• 11:59
  Speaker 8: like three percent, right, So when you're in that mode,
• 12:02
  Speaker 8: and even big blocks of space, there's in all of
• 12:04
  Speaker 8: Manhattan there's about twenty two high quality big blocks of space,
• 12:08
  Speaker 8: and there's right now over sixty companies looking for over
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  Speaker 8: one hundred thousand square feet, so one hundred thousand square
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  Speaker 8: feet only twenty two available and sixty something looking for
• 12:16
  Speaker 8: one hundred thousand square feets of blocks. So it's shifted
• 12:18
  Speaker 8: to a landlord's market versus a tenant market right now.
• 12:22
  Speaker 2: Of course, all office buildings are not created equal, and
• 12:25
  Speaker 2: plenty of office buildings are being retrofitted to become residential.
• 12:29
  Speaker 2: And we saw in New York at least an incident
• 12:32
  Speaker 2: in which there was a buckling of one of those
• 12:34
  Speaker 2: commercial buildings that's being converted into residential. Tell us what
• 12:38
  Speaker 2: you thought when that first happened, and you know just
• 12:41
  Speaker 2: your thought process and how we can prevent things like that.
• 12:44
  Speaker 8: Yeah, So these conversions of office to residential has been
• 12:49
  Speaker 8: a great program for New York. There was actually they
• 12:50
  Speaker 8: put a tax incentive in place to encourage it, and
• 12:53
  Speaker 8: there's been almost fifteen million square feet that's underway right now.
• 12:56
  Speaker 5: So take an old office buildings.
• 12:58
  Speaker 8: Creating housing where we have like a one point eight
• 13:00
  Speaker 8: eight percent vacancy rate in housing. So great public policy,
• 13:02
  Speaker 8: but not all conversions are created equal either, because this
• 13:05
  Speaker 8: is not just taking an office building and putting residential
• 13:09
  Speaker 8: into it. They were actually building another building on top
• 13:12
  Speaker 8: of the existing structure, which already takes a complex construction
• 13:16
  Speaker 8: project and makes it more complex. And you know, the
• 13:19
  Speaker 8: initial read out is that there was two columns that
• 13:23
  Speaker 8: were supposed to have been reinforced that were in reinforced,
• 13:26
  Speaker 8: which created.
• 13:26
  Speaker 5: That buckling that you're talking about.
• 13:29
  Speaker 8: You know, I think we're going to get better clarity
• 13:31
  Speaker 8: as to what ultimately happened and was it an engineering issue,
• 13:34
  Speaker 8: was it an issue on the project? But you know,
• 13:37
  Speaker 8: clearly this is a program that New York should continue
• 13:41
  Speaker 8: to lean into. It's really created a great dynamic for
• 13:43
  Speaker 8: New York. It's not only great in terms of creating housing,
• 13:45
  Speaker 8: but think about these little neighborhoods that we're creating that
• 13:48
  Speaker 8: used to be just commercial. Now people live there, They
• 13:51
  Speaker 8: support the retail and the restaurants on the weekends. You know,
• 13:53
  Speaker 8: there's these twenty four to seven walkable communities. So you
• 13:56
  Speaker 8: know what you have seen is lenders and investors have
• 14:00
  Speaker 8: raised the risk spectrum now because we're doing four thousand
• 14:03
  Speaker 8: units ourselves, both on the investing side and development side,
• 14:06
  Speaker 8: and we've looked at these things now and said, Okay,
• 14:09
  Speaker 8: if this risk is higher, if you're going to have
• 14:11
  Speaker 8: this overbuild, maybe we wouldn't do it today.
• 14:14
  Speaker 4: So talk to us about retail in big cities like
• 14:17
  Speaker 4: New York because when you walk out it, when you're
• 14:19
  Speaker 4: done with us today, you can walk down on Lexington Avenue.
• 14:21
  Speaker 4: I'm going to ask you to look right across the street.
• 14:23
  Speaker 4: There's a ton of unused retail space that's been there
• 14:28
  Speaker 4: since the pandemic. Can you go rent that today?
• 14:31
  Speaker 5: What's what's going on?
• 14:33
  Speaker 8: You know, it's it's again sub market by sub market
• 14:35
  Speaker 8: when you think about New York, right, so even this
• 14:37
  Speaker 8: point about these conversions.
• 14:38
  Speaker 4: Right, it's across the street from Bloomberg rent the space interesting.
• 14:42
  Speaker 8: The Upper east Side you know has had a more
• 14:44
  Speaker 8: challenging time than some of the others. But you go
• 14:47
  Speaker 8: by you know, Rock Center, the retail's packed, right, Obviously
• 14:51
  Speaker 8: you go down to Midtown South Chelsea retail packed, and
• 14:54
  Speaker 8: so what you're seeing in these are the neighborhoods where
• 14:56
  Speaker 8: people want to be. Grant Central has in terms of
• 14:59
  Speaker 8: you know, in Park Avenue one of the strongest retail
• 15:01
  Speaker 8: markets office markets in the country right now. And you
• 15:05
  Speaker 8: know it's also because of public transportation, right. I mean
• 15:08
  Speaker 8: we're building a three week on square.
• 15:10
  Speaker 2: Public transportation here at fifty ninth and lex I mean
• 15:12
  Speaker 2: there's something in.
• 15:12
  Speaker 4: Mexas I'm not getting something's wrong, Like it's hunted, it's mispriced,
• 15:17
  Speaker 4: and people were talking about Lexington Avenue at fifty eighth Street.
• 15:20
  Speaker 4: It doesn't get that much better than that, and this
• 15:23
  Speaker 4: seems been vacant and it's a big slug of space.
• 15:26
  Speaker 2: Right, It's not just a corner property, it's kind of
• 15:27
  Speaker 2: the whole block.
• 15:28
  Speaker 5: Yeah, look relief.
• 15:30
  Speaker 4: Scarlett and I were oute in San Francisco six months ago,
• 15:34
  Speaker 4: maybe for a real estate.
• 15:36
  Speaker 2: Yeah, and it was like everyone was bullish.
• 15:39
  Speaker 4: They were saying AI saved San Francisco. Literally, you know
• 15:43
  Speaker 4: it's now fully you can't get an apartment and all
• 15:45
  Speaker 4: the space is being leased like crazy. How's AI impacted
• 15:48
  Speaker 4: other markets? I think It's interesting when you think about
• 15:50
  Speaker 4: the AI.
• 15:51
  Speaker 8: There's compute power and there's people power yep, right, And
• 15:54
  Speaker 8: the compute power is happening all these data centers that
• 15:56
  Speaker 8: are billion built in these areas around the country with
• 15:59
  Speaker 8: energy is cheap.
• 16:00
  Speaker 5: You know.
• 16:00
  Speaker 8: People power is in the office buildings, right. And I
• 16:03
  Speaker 8: think what you're seeing in San Francisco is very focused
• 16:05
  Speaker 8: on tech. What you've seen in New York is an
• 16:07
  Speaker 8: incredible diverse ecosystem where you have this you know, you
• 16:11
  Speaker 8: have capital, you have creativity, you have collaboration, all combust
• 16:15
  Speaker 8: together through all these different industries, right. And so we're
• 16:18
  Speaker 8: seeing with our law firms seeing you in the capital markets.
• 16:20
  Speaker 8: I mean, think about this year in terms of you've
• 16:22
  Speaker 8: had the largest IPO, we had the largest M and A.
• 16:26
  Speaker 5: Wall Street earnings are off the roof. Right.
• 16:28
  Speaker 8: I just told you about the office market. I Sie
• 16:30
  Speaker 8: Nicks win the championship, right, we had the World Cup,
• 16:32
  Speaker 8: and in the energy in New York is unbelievable. But
• 16:35
  Speaker 8: AI is just like everything else, is a big driver
• 16:38
  Speaker 8: of the economic growth, either directly or indirectly with the
• 16:41
  Speaker 8: wealth effect, right, And that's something that we're getting a
• 16:43
  Speaker 8: great benefit and tailwind in New York.
• 16:45
  Speaker 2: For do you see Miami as a competitor to New
• 16:49
  Speaker 2: York for the for the financial sector?
• 16:51
  Speaker 5: You know, I don't think so.
• 16:52
  Speaker 8: I think that what you've seen over the last decade
• 16:55
  Speaker 8: is the financial sector, like a lot of other sectors,
• 16:57
  Speaker 8: have thought about a distributable workforce. So they need to
• 17:00
  Speaker 8: be in New York. This is where their customers, is
• 17:02
  Speaker 8: where the activity is. But they also can put people
• 17:04
  Speaker 8: in other parts of the country, whether it's Miami, whether
• 17:06
  Speaker 8: it's Dallas, whether it's Atlanta, and then when they go there,
• 17:10
  Speaker 8: you know, what you find is it does not have
• 17:11
  Speaker 8: the infrastructure to be able to be as competitive and
• 17:15
  Speaker 8: as New York.
• 17:15
  Speaker 6: Right.
• 17:16
  Speaker 5: It's it's you know, even there was an article.
• 17:17
  Speaker 8: This weekend that's now said that Miami costs more to
• 17:20
  Speaker 8: live than in New York, right, So it's you know,
• 17:22
  Speaker 8: it's it's going to get to a point where it's
• 17:24
  Speaker 8: going to have the same challenge of capacity issues that
• 17:27
  Speaker 8: we have in New York in places like Miami. I
• 17:30
  Speaker 8: think places like Dallas and Phoenix, and you know, they
• 17:32
  Speaker 8: actually have more capacity and that's why you're seeing other
• 17:35
  Speaker 8: firms announced, you know, relocating other operations there.
• 17:39
  Speaker 4: At Dallas has been a huge beneficiary and making grow.
• 17:42
  Speaker 2: That's the thing, right, there's there's no really, there's nothing
• 17:44
  Speaker 2: really hemming that market in.
• 17:46
  Speaker 8: Right where it's it's not the case in Miami, right
• 17:47
  Speaker 8: the congestion schools, everything's becomes a challenge there.
• 17:52
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