General Motors Chairman and CEO Mary Barra tours the GM Warren, Michigan facility on Wednesday, April 1, 2020. (Photo by John F. Martin for General Motors)
Today in trust and vulnerability as a strength: automotive edition! In its earnings call on May 6, 2020, General Motors delivered a “master class in disclosure and transparency,” per analyst Joseph Spak. In an industry not known for being forthcoming, open communication stands out—and can push the competition.
Like most of the economy, the auto industry is reeling from the pandemic. In the first quarter, BMW sold 15% fewer cars year over year. Nissan lost 30%. Subaru lost 17%. But GM is doing far better in comparison: they lost 7% on the quarter year over year. Good communication gets some of the credit.
After giving Wall Street a “detailed and articulate” overview of the impact of the coronavirus pandemic on business, the stock surged 7.1% in premarket trading, and another 4% the following day. After previously having downgraded the stock, analysts at Deutsche Bank upgraded GM to buy.
“At the end of the day, these are still assumptions. But the framework allows investors to understand the business and effectively make their own judgments,” analyst Joseph Spak of RBC Capital goes on to say.
As I’ve written before, confident decision-making is a stepping stone to trust. More and more corporate communications and smart CEOs demonstrate that the right volume of detail empowers and builds trust.
In contrast, an opaque tweet from Elon Musk about Tesla’s stock price being “too high” fit his history of vague, troublesome communication. After he hinted at going private in 2018, the SEC hit him with $20MM securities fraud and required Tesla to oversee his social media use.
GM spoke more clearly. Their earnings call laid out the impact of COVID-19 on production and cash burn. If global production drops 60% – 70% in Q2, GM will lose $7BB – $9BB. Because they started on restructuring early, they stemmed greater losses, in comparison to competitors.
Just as analysts responded positively to the detail GM shared, investors did too. The stock climbed 4% the day after the call. That volume of detail and vulnerability might be risky to brands less comfortable with transparency, but respect pays off. Trust is a two-way street.