What's going on?

General Motors (GM), the US automaker, said it made more than twice as much profit in the second quarter than it did a year ago. It also predicted that it would make more profit in total for 2016 than it previously thought. All that good news helped send the stock up 2%.

What does this mean?

Auto sales have been strong in the US, partly because the economy appears to be doing reasonably well but also because interest rates are so low (which allows people to borrow money more cheaply in order to finance their purchase). The low oil price (compared to a few years ago) has also helped as people�s preferences have shifted towards SUVs and trucks � and auto companies make more profit (technically �margin�) when they sell those types of vehicles.

Why should I care?

For stocks: GM has slimmed down but packs a stronger punch. �


GM�s strategy in recent years has involved slimming down its operations and focusing on making more money on each vehicle it sells (rather than making less money per vehicle but trying to sell as many as possible). GM sold about the same number of vehicles as it did a year ago but made more profit � and that�s proving a popular strategy with shareholders.



The bigger picture: Tesla�s Elon Musk just spelled out his plans for the future of the automobile � and it�s a threat to the established players like GM.


In a Tesla strategy update dubbed his �Masterplan, Part Deux,� Musk outlined where he wants to take Tesla. The plan includes making all Tesla vehicles capable of self-driving and, if the owner wishes, part of a car-sharing network. Car-sharing itself is a threat to auto companies (because it probably means fewer people will own vehicles) and autonomous driving is, at the very least, a technological challenge. GM is flying high now, but how it adapts to a (likely) radically different future for transportation will be interesting to see.