General Motors Company (NYSE:GM) said it has cut hundreds of full-time contract positions mainly from its engineering hub in Detroit.
The cuts were to contract workers from the Detroit car maker’s large product development group, who were terminated over the weekend, Wall Street Journal reported, citing a GM spokeswoman.
The spokeswoman told the Journal that “several hundred people” were dismissed but declined to specify a number.
The product development group, where the cuts occurred, employs thousands of engineers, designers and other workers who develop future GM car models.
Investors reacted to the news, sending GM shares up 2.5% to $33.88.
In April, GM said about 5,000 salaried US workers, along with some executives who work in global positions, agreed to a voluntary buyout. GM took a first-quarter charge to cover most of the roughly $1 billion cost of the buyout.
In March, the Detroit auto maker cut more than 500 salaried employees.
GM appears to be laser-focused on trimming costs despite being on solid ground in a challenging macro-economic environment.
Analysts at Wedbush noted that GM delivered rock-solid March results out of the gates for 2023 with a strong outlook for the rest of the year and “a raised guidance bar” which is “music to the ears of investors.”
GM reported first quarter results that saw revenue rise 11% year-on-year to $39.99 billion, handily beating Wall Street’s estimate of $38.54 billion due to strong customer demand for its cars.
“With Barra & Co. in the midst of a massive EV transformation this was a key quarter and outlook for the Street as it appears the profit margins and growth targets for the rest of the year are humming in a shaky macro,” the Wedbush analysts said in a note to clients.
“Importantly the $2 billion of cost savings (by the end of 2024) is ahead of plan and the EV production/model lineup looks on target with a robust 2H23 on the docket.”
In January, GM set a goal of cutting $2 billion from operating costs by the end of 2024, with 30%-50% of the total being achieved this year.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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