General Motors announces $10bn share buyback and boosts dividend by 33%

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General Motors announced plans to return “significant capital” to shareholders as the automaker seeks to move past recent labour strikes and difficulties with its ambitions for electric vehicles and driverless cars.

GM on Wednesday announced a $10bn share buyback and said it would increase its quarterly dividend by 3 cents per share — or 33 per cent — to 12 cents, helping send its stock more than 8 per cent higher in pre-market trading.

The announcement came as the company reinstated its earnings guidance for fiscal 2023, having withdrawn it about a month ago because of a labour dispute that ultimately led to thousands of US autoworkers walking off the job for about six weeks.

GM reached a tentative deal with the United Auto Workers union in late October, after competitors Ford and Stellantis. The labour action, which GM said in October had already cost $800mn, resulted in the manufacturer agreeing to raise wages for its workforce by 25 per cent, as well as to include its joint-venture battery plants under its main contract with the union.

“We are finalising a 2024 budget that will fully offset the incremental costs of our new labour agreements,” chief executive Mary Barra said on Wednesday.

Barra said the company’s cash balance, “which is well above our target, is a function of our recent record profits and our prudent management of resources through the pandemic, supply chain disruptions and labour negotiations”.

GM also plans to cut spending on Cruise, its self-driving unit, after a crash last month injured a pedestrian.

“We must rebuild trust with regulators,” Barra said in a letter to shareholders. “This includes making improvements driven by the independent safety and incident reviews that are ongoing . . . We expect the pace of Cruise’s expansion to be more deliberate when operations resume, resulting in substantially lower spending in 2024 than in 2023.”

GM on Wednesday predicted it would have adjusted earnings of between $7.20 and $7.70 a share in the 2023 fiscal year. That compares with its previous outlook of $7.15 to $8.15 a share and analysts’ estimates of $7.45.

The company said it now expected adjusted automotive free cash flow of $10.5bn to $11.5bn, compared with the previous forecast of $7bn to $9bn.