General Motors (GM) is driving quicker than perhaps some expected into the auto insurance market.
The automaker is now 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. GM is using data from its OnStar system to help determine coverage for Onstar members, although the offering is open to non-OnStar drivers.
“We are enjoying some good success in the test markets and going through the process of making sure that we have got the appropriate licenses to do business wherever we need to,” GM CFO Paul Jacobson said on Yahoo Finance Live. “I would say it’s in the growth phase right now, very early stages.”
Jacobson said GM will have more to say 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 the boom in car demand during the pandemic, the company saw strength pretty much across the board but most notably in pickup trucks and crossovers.
But 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 compared to 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 second half of the year than the first half due to plant shutdowns caused by the semiconductor shortage. GM is also baking in $1.5 billion to $2 billion in commodities inflation.
Jacobson says the outlook is appropriately cautious given the external environment.
“We thought a cautious tone was appropriate for the time. We have always been focused on making sure that we are putting numbers out that we know we can deliver to the Street,” Jacobson said.