General Motors Co. is taking proactive measures to brace for an expected economic downturn, according to Chief Financial Officer Paul Jacobson. Speaking at an automotive industry panel hosted by the Chicago Federal Reserve Bank’s Detroit office, Jacobson emphasized the importance of maintaining lean dealer inventories and building robust cash reserves to weather future financial instability. n nHe acknowledged that while economic cycles are unavoidable, GM aims to reduce internal volatility that has historically plagued the auto sector. Jacobson noted that past practices—such as supplying dealerships with four to six months’ worth of vehicles—led to overstocking, which in turn forced steep price cuts when demand dropped unexpectedly. This cycle of overproduction followed by discounting weakened profitability and strained cash flow needed for innovation. n nTo counter this, GM concluded 2025 with an average 48-day supply of vehicles at its dealerships and plans to sustain inventory levels between 50 and 60 days. This strategy allows the company to respond swiftly to shifts in market demand without being burdened by excess stock. n nIn addition to inventory control, GM is focusing on strengthening its free cash flow. Historically generating around $3 billion in surplus cash annually, the automaker has now increased that figure to approximately $10 billion. Jacobson described this financial buffer as a critical safety net, enabling the company to absorb short-term demand shocks while continuing to invest in long-term initiatives such as electric vehicle development and digital infrastructure. n n”We can’t avoid recessions,” Jacobson stated, “but we can position ourselves to be more resilient.” By aligning production more closely with real-time demand and preserving liquidity, GM intends to maintain stability even during periods of economic weakness. n
— News Original —n”GM prepares for economic downturn: ‘It’s coming,’ CFO says”nGeneral Motors Co. is strategizing for an inevitable economic downturn by paring down dealer inventory and maintaining a cash safety net, Chief Financial Officer Paul Jacobson said Wednesday. n nJacobson ‘s comments to a panel of auto insiders at the Chicago Federal Reserve Bank ‘s Detroit branch provide insight into industry leaders ‘ expectations for the broader economy, as well as reassurance that the Detroit company is taking steps to remain resilient in tougher times. n n”We ‘re going to see a weak economy at some point. I hope it ‘s not this year, hope it ‘s not the year after that. But it ‘s coming,” Jacobson said. “We can ‘t dodge economic cycles, but what we can do is try to minimize the self-imposed cyclicality that we ‘ve seen in the industry.” n nPart of GM ‘s plan hinges on controlling the number of vehicles its dealers have on hand. n nIn the past, Jacobson said automakers typically ensured that dealers had four-to-six months worth of models on their lots. But that creates problems, he said, when sudden shocks to the economy dry up demand, forcing automakers to offer steep discounts. n nThe ebb and flow of ramped-up production followed by discounts during low-demand periods “really hampered and hindered the business,” Jacobson said. n n”Because we were chasing demand with lower prices at the same time we needed that cash flow to be able to invest in the future,” he said. n nJacobson said GM ended 2025 with an average 48-day supply at its dealers and aims to keep supply around 50 to 60 days. n n”When the inevitable downturn or recession or weakness might hit, we ‘re going to be able to respond much, much faster because we ‘re going to be focused on the business forward, rather than trying to undo some of the inventory that we had built up over time,” Jacobson said. n nThe second part of GM ‘s plan centers on what ‘s called free cash flow, meaning taking in more money than the company is spending at any given time. Jacobson said GM historically has had about $3 billion in excess cash flow. Now, free cash flow is closer to $10 billion, he said. n n”That ‘s important because that ‘s our cushion,” Jacobson said. “That ‘s our safety blanket so we can absorb short-term shocks to demand.”