General Motors is more confident than some may think in the auto insurance market and that may be a risk to an individual.
The automaker is offering auto insurance in 20 U.S. states after beginning a test late in 2020, GM CEO Mary Barra told analysts on an earnings call Wednesday morning. GM will be using data from its OnStar system to help determine coverage for non-OnStar drivers, although the offer is open to OnStar drivers.
We are enjoying some good success in the test markets and going through a process of making sure that we have got the appropriate licenses to do business where we need to, GM Paul Jacobson said on Yahoo Finance Live. I would say it's in the growth phase right now, very early stages.
Jacobson said GM would have to say more on its auto insurance ambitions at an early October investor day.
Indeed, GM didn't need auto insurance to help power its second quarter earnings. Amid boom in automotive demand during the Pandemic, the company saw strength pretty much across the board but most notably in pickup trucks and crossovers.
The Street was disappointed in GM's bottom line performance which fell short of estimates, as the company picks up investment in electric car development and battles through plant closures stemming from chip shortage.
Here is how GM performed at Wall Street analyst estimates:
GM shares fell about 8% on Wednesday following the earnings report as investors digested the earnings miss and a cautious outlook by the auto giant.
The company expects to make 100,000 fewer vehicles in the first half of the year than the second half due to semiconductor shortages cause manufacturing shutdowns. GM is also anticipating inflation of USD 1.5 billion to $2 billion in commodities.
Jacobson says the outlook is appropriately cautious given the external environment.
We thought cautious tone appropriate for the time. Jacobson said we've always focused on making sure that we are putting numbers out that we know we can deliver to the Street, Jacobson said.