Business

Disney prevailed in the proxy fight against Nelson Peltz’s Trian Partners.
Peltz failed to win a seat as shareholders voted to reelect the company’s full board
It’s a defeat for Peltz and a stamp of approval for efforts by Disney’s board and CEO Bob Iger to turn around the company.

(L to R) Chief executive officer and chairman of The Walt Disney Company Bob Iger and Mickey Mouse look on before ringing the opening bell at the New York Stock Exchange (NYSE), November 27, 2017 in New York City. 
Drew Angerer | Getty Images

Disney shareholders on Wednesday reelected the media conglomerate’s full board, preliminary results show, handing a stinging defeat to activist Nelson Peltz and former Marvel CEO Ike Perlmutter, both of whom agitated for change at one of America’s most storied companies.
The widely expected victory caps a combative monthslong process and affirms the board’s decisions, from the move to bring back CEO Bob Iger to his efforts to reinvigorate the $223 billion media company. Peltz-led Trian Partners wanted to oust two directors, Maria Elena Lagomasino and Michael Froman, citing sustained share underperformance, a failed succession process, and billions in misdirected investments.

Peltz lost to Lagomasino by a 2-to-1 margin, a person familiar with the matter said. Retail voters overwhelmingly supported Disney, that person added, helping to deliver Iger 94% of the overall vote. Former Disney Chief Financial Officer Jay Rasulo, whom Trian also nominated, lost to Lagomasino by an even larger 5-1 margin. The person characterized it as Peltz’s largest loss ever.
Percentage-wise, turnout for the director vote was in the mid-60s, another person familiar with the matter said. In 2023, around 63% of Disney shareholders voted.
A second activist, Blackwells, also failed to win board seats in its own long shot bid.
“I want to thank our shareholders for their trust and confidence in our Board and management. With the distracting proxy contest now behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers,” Iger said in a release.
Disney deployed significant resources in the proxy fight. The company called in support from its founding family, Star Wars creator George Lucas, JP Morgan CEO Jamie Dimon and Laurene Powell Jobs, the widow of Pixar and Apple CEO Steve Jobs.

While Peltz will not end up on the Disney board, he and his firm have claimed some credit for the rebound in the company’s shares.
“While we are disappointed with the outcome of this proxy contest, Trian greatly appreciates all of the support and dialogue we have had with Disney stakeholders. We are proud of the impact we have had in refocusing this Company on value creation and good governance,” Trian said in a statement.
The company also spent an estimated $40 million fighting off Peltz. The full-court press worked. Disney’s two largest shareholders, Vanguard and BlackRock, decided to back management in the final days before Wednesday’s meeting.

Ultimately, the activists failed to convince enough retail or institutional shareholders that he had a meaningful plan to fix the House of Mouse. While Peltz’s candidacy picked up meaningful support from proxy advisors and smaller institutional investors, shareholders were less compelled by Rasulo.
Though its choices did not win board seats, Blackwells cheered the fact that Peltz was not elected.
“Blackwells’ primary objective was achieved — keeping Nelson Peltz out of the Disney Boardroom,” Blackwells said in a statement. “The company would have benefited from any one of our candidates for the hard work needed over the next few years to advance this iconic company, but we respect the will of the shareholders and the outcome.”

Jay Rasulo and Nelson Peltz.
Patrick T. Fallon | Bloomberg | Getty Images | Adam Jeffery | CNBC

Peltz, who dislikes being called an activist but has orchestrated successful campaigns at iconic companies like PepsiCo, P&G and Wendy’s, controls a $3.98 billion stake in Disney, or about 2% of total shares outstanding. Most of those shares are owned by Perlmutter.
With Disney shares up nearly 50% since Peltz’s campaign first began, Trian and Perlmutter gained a lot despite their board defeat. Peltz is partially on the hook for an estimated $25 million spent on the fight, a small amount compared to the paper gains in the stake he controls.

As it moves past the battle with Peltz, Disney still faces unprecedented challenges. ESPN has shed subscribers for years, raising questions about whether it is prepared to go toe-to-toe with streaming upstarts. Disney’s streaming business has spent billions to win subscribers and is losing money as it tries to catch market leader Netflix.
Perhaps most significantly, the company is searching for a successor to Iger for the second time in five years. Disney’s botched succession, where Iger’s hand-picked replacement Bob Chapek was ousted just two years into his tenure, was a key point Trian used against the company.
“Thank you for your trust and confidence in the Disney project management, and the ambitious strategy we’re implementing across our businesses to build for the future,” Iger said after the preliminary vote was reported. “Now that this distracting proxy contest is behind us, we’re here to focus 100% of our attention on our most important priorities, growth and value creation for our shareholders and creative excellence for our consumers. Thank you again for your support and for your continued investment in this.”

Nelson Peltz, founding partner and CEO of Trian Fund Management, speaks with CNBC’s Andrew Ross Sorkin on July 17, 2013 in New York.
Heidi Gutman | CNBC, NBCU Photo Bank, NBCUniversal via Getty Images

There is evidence that major proxy advisors agreed with Peltz’s argument that the board was ill-equipped to take on a second search process.
Shareholder advisory firms Glass Lewis and ISS both noted the succession issues in their recommendations to investors. Glass Lewis sided with Disney and asserted Iger’s return, paired with this year’s nominations of Morgan Stanley executive chairman James Gorman and former Sky CEO Jeremy Darroch to the board, have given the company “adequate opportunity to launch a more credible succession program and develop, communicate and execute on several key initiatives which appear to reasonably target acknowledged operational and financial weaknesses at Disney.”
Investors rallied around Disney in February after the company made a series of major announcements durings its earnings call, including that it had obtained the exclusive streaming rights to Taylor Swift’s Eras Tour concert film, a $1.5 billion strategic investment in Epic Games as well as a flagship ESPN streaming service.
Peltz called the slew of announcements a “spaghetti-against-the-wall” plan that was meant to “distract shareholders.”
Shares of Disney have jumped 23% since Disney’s fiscal first-quarter earnings report in early February.
Disclosure: Sky News is owned by Comcast, CNBC’s parent company.

Don’t miss these stories from CNBC PRO: More

FOR YEARS foreign companies were desperate to get into China, and faced formidable bureaucratic obstacles in their way. Now many are getting out. Over the past year several foreign law firms have closed some or all of their Chinese offices. Orrick, Herrington & Sutcliffe, an American one, said on March 22nd it would shut the Shanghai office it opened 20 years ago. Another, Akin Gump Strauss Hauer & Feld, plans to exit China altogether this year. Some global investment banks are pruning their Chinese staff. So are a few large accountancies and due-diligence groups. In 2023 foreign direct investment in China fell to its lowest level in 30 years.One reason for foreigners’ change of heart is the sorry state of the Chinese economy. Of the 18 largest multinational companies that report their earnings from China, 13 saw annual revenues there fall in 2023. Qualcomm and Samsung, two technology giants, recorded sales drops of more than 20%. Apple sold nearly a quarter fewer iPhones in the first six weeks of 2024 than it did in the same period the year before. In February Tesla shifted 19% fewer electric cars. Weak Chinese sales are the main reason why Kering, the French owner of Gucci, expected to flog a fifth less of its bling in Asia in the first quarter.President Xi Jinping and the Communist Party are keenly aware of these problems. And they care. At least that was the message broadcast loudly at the China Development Forum (CDF) in Beijing on March 24th-25th, and echoed a few days later at the Boao Forum, China’s answer to Davos. The mood at both jamborees was decidedly better than last year, when it was spoiled by a suspected Chinese spy balloon which floated above America before being shot down on the order of President Joe Biden. Many Western corporate bigwigs who stayed away were back; more than 80 foreign chief executives turned up in Beijing, including far more Americans. In Boao a senior official promised that China would make it easier to move capital in and out of the country. Two days earlier, at a separate event, Mr Xi assured a handful of American CEOs that China would continue to reform and open up.Participants report that Mr Xi and party officials are doing more now than in the past four years to stress that China is still open for business—a nice change after the pandemic years, when China’s leaders self-quarantined themselves from the outside world. “At the very least the meetings showed there is a strong desire to communicate,” says a boss who attended the CDF both this year and last. Earlier in March the State Council, China’s cabinet, launched a 24-point “action plan” for attracting foreign investment. It included familiar ideas such as protecting intellectual property and promoting trade agreements, and welcome additions such as fostering cross-border data flows. A few weeks later the main internet regulator eased some onerous data rules that in the past two years have made foreign businesspeople nervous about routine things such as sending emails to colleagues abroad.The trouble is that Mr Xi’s desire to lure back foreign business runs up against his other objectives. Observers describe his leadership model as “wanting this, that and the other”. Foreign companies are to do business in China but keep their hands off Chinese data. Multinationals are to double down on China and homegrown brands are meant to give them a run for their money. China’s technology industry is to decouple from the West while attracting Western investment. And global businesses are to like all this, never mind that it works against their commercial interests.Marxist theories of the sort Mr Xi likes to elevate may be able to resolve these contradictions. But capitalists see trade-offs and choices. And business logic increasingly argues in favour of greater circumspection about China.Consider data flows. Regulators may have loosened some restrictions but weeks earlier they tightened others, by updating a state-secrets law for the first time since 2010. The law now covers “work secrets”, or information that is “not state secrets but will cause certain adverse effects if leaked”. The vague wording gives security agencies broad powers to consider any communication between foreigners and Chinese employees as a potential violation. On March 28th, as foreign bosses mingled with party ones at the Boao summit, the Ministry of State Security released a six-minute instructional video. In it a Chinese engineering company is convinced by foreign investors to allow a foreign due-diligence firm to investigate it. An executive at the company travels in time to visit an incarcerated version of his future self, who warns him not to hand over company secrets to the investigators. When, back in reality, they ask him to share sensitive information, the enlightened executive reports them to the authorities instead.SpookedThe lessons of the film are as unsubtle as the acting. For Chinese viewers, it is that foreign investors and consultants could be working for hostile foreign governments and must not be trusted. For foreigners, it is not to look too hard into obvious material concerns such as a company’s supply-chain vulnerabilities or its links to the state, which could make a business susceptible to Western sanctions.Any such investigation of China’s chip industry, a big target of American restrictions, has long incurred the party’s wrath. Now less sensitive sectors, such as electric vehicles (EVs), batteries, renewables and biotechnology, are increasingly out of bounds, too. Chinese executives at the Beijing branch of a climate consultancy were recently questioned by security agents about the information it collects on local firms and to what foreign entities it has divulged it. The interrogation came as a surprise, because the outfit had enjoyed seemingly strong support from China’s environmental regulators. The incident led it to slim down its Chinese operations and try to eliminate reporting lines between staff based in China and in other countries.A further reason foreigners are having second thoughts about China is stiffening local competition, a lot of it given a leg-up by the state, one way or another. Government support for makers of EVs, batteries, solar panels and wind turbines has created oversupply and pushed down prices. This has been a blessing for foreign importers of Chinese-made components. For multinationals trying to compete in China it has been a curse. Margins on sales of electrolysers, bulky machines used to produce hydrogen, are said to have dropped to almost nothing in recent months. In March BYD, a Chinese EV giant and longtime recipient of state largesse, dropped the price of its compact electric car to just $9,700, perpetuating a price war that has forced Tesla to sell its EVs for less. Foreign industrial firms face hundreds of local rivals that appear to operate in the red. In 2023, 22% of industrial companies in China lost money, an all-time high.Officials also invoke a mix of national security and national pride as a reason to choose Chinese products over Western ones. Apple must contend not just with downbeat consumers but also with a new line of smartphones from Huawei, a Chinese tech champion targeted by American sanctions—and with public servants and employees of state-run firms being told not to buy iPhones, lest they contain backdoors through which the American government can steal information. Teslas have been banned from some government facilities and airports on the grounds that they film their surroundings. State-owned enterprises and government agencies have been instructed to replace chips from Intel and AMD, two American semiconductor firms, with Chinese-made ones by 2026. They are also to phase out Microsoft’s Office software over the next few years.For many foreigners, overcoming these obstacles may be a price worth paying. In a survey of 354 multinationals conducted by Morgan Stanley, a bank, two-thirds of foreign firms were optimistic about China in the last quarter of 2023, the most in two years and up from a trough of 46% in the first quarter of 2022. For some companies China is a place to sharpen their competitive edge: if they can make it there, they can make it anywhere. Plenty want to preserve access to China’s vast market and manufacturing base. On March 21st, to much fanfare, Tim Cook opened a new flagship store in Shanghai and reiterated that “There’s no supply chain in the world that’s more critical to us than China.” To ram the point home, four days later he told an audience at the development forum in Beijing, “I love China and the people.”Yet to many Western ears, Mr Xi’s commitment to openness rings increasingly hollow. His regime can repeat such bromides only so many times before you grow cynical, says a weary boss of a multinational’s Chinese branch. In the long run a surfeit of foreign cynicism may end up being even more damaging to China’s economy than a glut of EVs and electrolysers. ■ More

Shares of Ulta fell on Wednesday, as the retailer warned of cooling demand in the beauty category.
CEO Dave Kimbell said Ulta expected demand to moderate, but the slowdown has been “a bit earlier and bit bigger than we thought.”
Many retailers, including Macy’s and Kohl’s, have been trying to drive sales growth by expanding their focus on beauty.

People walk past an Ulta Beauty store in the Manhattan borough of New York City, New York, U.S., March 8, 2022. 
Carlo Allegri | Reuters

Ulta Beauty shares tumbled about 13% on Wednesday as CEO Dave Kimbell warned of cooling demand for beauty products.
Other stocks in the segment, including E.L.F. Beauty, Estee Lauder and Coty, also fell on Wednesday morning.

“We have seen a slowdown in the total category,” Kimbell said at an investor conference hosted by JPMorgan Chase. “We came into the year — and we talked about this on our [earnings] call a few weeks ago — expecting the category to moderate. It has [had], as I said, several years of strong growth. We did not anticipate it would continue at the rate that it’s been growing.”
He said Ulta expected sales to grow in the mid single-digits for the year.
But Kimbell added that slowdown has been “a bit earlier and bit bigger than we thought.” He said that trend has cut across price points and different beauty categories, but has been more significant in prestige makeup and haircare.
Beauty has stood out as one of the hottest categories in retail. Even as U.S. consumers watch their spending on discretionary items like clothing, they have continued to spring for makeup, skincare items and other beauty products. The strength of the category has inspired many retailers to make bigger bets on beauty.
Target has opened a growing number of Ulta Beauty shops in its stores. Kohl’s plans to open Sephora shops in all of its locations. Macy’s is expanding its beauty chain Bluemercury.

In his remarks on Wednesday, however, Kimbell said beauty shoppers aren’t immune to feeling economic pressures, even in a category that’s been red hot. He referred to dynamics that may cause them to pull back on spending, including rising credit card debt, geopolitical conflicts and the upcoming presidential election.
“It just creates this soup of activity for our consumers that they’re trying to navigate through,” he said.
Ulta said last month on an earnings call that it expected net sales to range from $11.7 billion to $11.8 billion for its 2024 fiscal year. That would be higher than the $11.2 billion of sales that it reported for the most recent fiscal year.
The retailer said it anticipates comparable sales, a metric that takes out the impact of opening and closing stores, to increase by 4% to 5% this fiscal year. That would be a slowdown from growth of 5.7% in the previous fiscal year and 15.6% in fiscal 2022.
Ulta’s stock was trading around $447 midday on Wednesday. Its shares hit a 52-week high of $574.76 in mid-March, just ahead of its release of holiday-quarter results. So far this year, Ulta shares are down nearly 8%, trailing the nearly 10% gains of the S&P 500. More

Vanguard has voted for incumbent Disney directors over Nelson Peltz’s Trian Partners nominees ahead of Wednesday’s shareholder meeting, Bloomberg News reported, citing people familiar with the matter.
The index fund manager is Disney’s largest shareholder and a key vote for both sides.
Vanguard and BlackRock, the company’s two largest shareholders, have now both reportedly backed Disney’s current board and CEO Bob Iger.

Bob Iger, CEO of The Walt Disney Company, speaks during the grand opening ceremony of Shanghai Disney Resort’s Zootopia-themed attraction at Shanghai Disney Resort on December 19, 2023 in Shanghai, China.
Visual China Group | Getty Images

Disney’s largest shareholder, index fund manager Vanguard, plans to support management over Nelson Peltz’s Trian Partners in Wednesday’s board vote, Bloomberg News reported Tuesday, citing unnamed people familiar with the matter.
Institutional shareholders have until Wednesday to change their vote. Vanguard owns 7.8% of Disney shares. BlackRock, Disney’s second-largest shareholder with 4.2% of shares, is also supporting the incumbent board and CEO Bob Iger, The Wall Street Journal reported Monday.

The reporting on how Disney’s largest shareholders are supposedly voting prompted harsh criticism from onetime activist investor Bill Ackman on Tuesday evening.
“Only the company and its advisors have access to how shareholders have voted before the day of the annual meeting,” Ackman wrote on social media platform X. “The reason why the progress of an election for directors must be kept confidential until the results are final is that leaking the results can affect the ultimate outcome.”
Disney shareholders should support Peltz’s efforts, Ackman wrote, both because he would be “greatly additive” to Disney and because the media leaks, which Ackman alleged came from Disney or its advisors, raised the question of why management was “fighting so hard to keep him off.”
It would be a significant blow to Peltz’s ambitions to join Disney’s board if both BlackRock and Vanguard move to back the media company’s candidates. That would leave only State Street and Geode Capital Management, the company’s third- and fourth-largest shareholders respectively, as unknowns.
Through an arrangement with former Marvel Chairman Ike Perlmutter, Trian controls 1.8% of Disney shares, making it the fifth largest shareholder. Retail investors have until 11:59 p.m. ET Tuesday to submit their vote by phone or online.

Trian has won support from other, smaller shareholders, including Neuberger Berman and CalPERS. For its part, Disney has called in some of the most prominent names in the corporate and media world, including JPMorgan Chase CEO Jamie Dimon and Star Wars creator George Lucas.
Disney’s shareholder meeting begins Wednesday at 1 p.m. ET.
Vanguard declined to comment to CNBC.
Read the full Bloomberg report here.

Don’t miss these stories from CNBC PRO: More

“THE DIFFICULTIES inherent in such a reorganisation were many and serious.” That is how in 1893 Charles Coffin, the first chief executive of General Electric (GE), described merging three businesses into what became the iconic American conglomerate. More than 130 years later Coffin’s latest successor, Larry Culp, must be feeling similarly about doing the reverse. On April 2nd GE split into two public companies: GE Aerospace, a maker of jet engines, and GE Vernova, a manufacturer of power-generation equipment. A third, GE Healthcare, a medical-devices firm, was spun off in January 2023.Chart: The EconomistInvestors are not mourning the end of GE as they, their fathers, grandfathers and great-grandfathers knew it. On the eve of the split the company’s market value hovered at nearly $200bn—and more than $230bn if you add GE Healthcare’s (see chart 1). In November 2018, shortly after Mr Culp took over as boss, the whole group was worth $65bn, the least since the early 1990s. That June it had been ignominiously kicked out of the Dow Jones Industrial Average (DJIA), an index of American blue chips. In the past year both GE and GE Healthcare have handily outperformed the DJIA. Their shares have also done better than those of most American spin-offs (see chart 2). Mr Culp says that the group could not continue as an “all-singing, all-dancing GE”. Instead, GE’s corporate progeny will become less general and, amid the energy transition, more electric.Chart: The EconomistFor much of its history GE was synonymous with size. Under Jack Welch, the acquisitive CEO who ran it from 1981 to 2001, it became the world’s most valuable company. Subsequent losses at GE Capital, its bloated finance arm, and troubles in its core industrial businesses laid the giant low. Jeff Immelt, Welch’s successor, sold off GE’s media, home-appliance and, belatedly, finance assets but spent $11bn on the ill-timed takeover of a power-and-grid business of Alstom, a French conglomerate, and $7bn on a stake in Baker Hughes, a purveyor of oil-industry gear. John Flannery, who replaced Mr Immelt in 2017, had the idea of spinning off the health-care division and focusing on GE’s core businesses, aviation and power generation. But he was dumped barely a year into the job, as GE’s share price cratered.As a result, Mr Culp, the first outsider to run GE, inherited a mess. GE ended 2018 with a $23bn write-down of its power business (largely due to the Alstom deal), a $15bn capital shortfall in a rump reinsurance business, a net annual loss of $22bn and more than $130bn in debt. On paper his rescue plan looked similar to Mr Flannery’s: hive off health, double down on aircraft engines and power. The way he went about it, though, was different.He halted his predecessor’s proposed spin-off of the health-care business, realising that GE would be too weak in the short run to survive without the health unit’s income. Instead he sold GE’s biotechnology business to his old employer, Danaher, another industrial group, for $21bn; accelerated the move towards cleaner energy by divesting the stake in Baker Hughes; and flogged GE’s aircraft-financing unit for more than $30bn. He also cut the quarterly dividend from 12 cents a share down to a cent. Taken together, these moves reduced GE’s debt by some $100bn.Critically, Mr Culp understood that reforming GE required not just changes to its structure but also to its operations. Six Sigma, a series of techniques championed by Welch that aimed to keep manufacturing defects below 3.4 per million parts, had become a barrier to innovation and was out. Instead Mr Culp introduced GE to “lean management”, which looks for small changes that add up to big improvements over time. This approach, pioneered by Toyota in Japan, involves managers solving problems by visiting the factory floor or their customer rather than from the comfort of their desks.Today GE executives pepper their disquisitions with Japanese terms such as kaizen (a process of continuous improvement), gemba (the place where the action happens) and hoshin kanri (aligning employees’ work with the company’s goals). More important, Mr Culp and his underlings routinely spend a week on the factory floor alongside workers. The company credits this system for improvements such as reducing the total distance a steel blade for its wind turbine travels during the manufacturing process from three miles (5km) to 165 feet (50 metres), and shaving the time to build a helicopter engine from 75 to 11 hours.This puts the two daughter firms in fighting shape to thrive as their sister, GE Healthcare, has done. In 2023 GE Aerospace and GE Vernova generated combined revenues of $65bn, up from $55bn the year before. Engines made by GE Aerospace, the group’s most profitable division, which Mr Culp has chosen to run after the break-up, power three-quarters of all commercial flights. GE Vernova’s turbines generate a third of the world’s electricity.Like many successful managers, Mr Culp also has luck on his side. Demand for passenger jets—and thus the engines that keep them aloft—is rebounding sharply from a pandemic slump. With a backlog of orders until the end of the decade, GE Aerospace expects adjusted operating profit to surge from $5.6bn in 2023 to $10bn by 2028. The turbulence at Boeing, which GE supplies with engines for the planemaker’s troubled 737 MAX planes, means that airlines facing delayed deliveries of these narrowbody workhorses will need to stretch their exisiting fleet. That, points out Sheila Kahyaoglu of Jefferies, an investment bank, increases demand for GE Aerospace to keep older engines going. Last year the services business accounted for almost 70% of the division’s revenues.The winds look equally favourable for GE Vernova. Operating margins in the business rose from low single digits in 2019 to almost 8% in 2023. The International Energy Agency, an official forecaster, estimates that demand for electricity generation will grow by more than half by 2040 as power-hungry data centres and electric cars guzzle more electricity. America is lavishing subsidies and tax breaks on renewable energy projects. Scott Strazik, a GE veteran who will run GE Vernova, believes that this will help the company attain the scale necessary to spread the high costs of wind-turbine manufacturing, which is still lossmaking.GE’s run of good fortune may not last. Projections for traffic in the notoriously cyclical airline business may turn out to be too rosy. If Boeing doesn’t pull out of its nosedive GE Aerospace’s order books could take a hit. The transition to clean energy in America, GE Vernova’s largest market, has been fitful even under Joe Biden, its climate-friendly president. Should the carbon-cuddling Donald Trump return to the White House next year, he has vowed to gut green subsidies. GE’s businesses, in other words, face many and serious difficulties ahead. But at least reorganisation is not one of them. ■ More

General Motors on Tuesday reported a 1.5% decline in first-quarter U.S. vehicle sales compared to a year ago.
The Detroit automaker said the decline to 594,233 vehicles sold during the first three months of the year was largely due to a 22.9% year-over-year decline in sales to fleet customers.
GM’s sales are below expectations for the overall industry.

The 2024 Buick Envista.

DETROIT — General Motors on Tuesday reported a 1.5% decline in first-quarter U.S. vehicle sales compared to a year ago, as the overall auto industry normalizes after years of disruptions and volatile results.
The Detroit automaker said the decline to 594,233 vehicles sold during the first three months of the year was largely due to a 22.9% year-over-year decline in sales to fleet customers. Retail sales to customers were up 6%, GM said.

GM’s sales were in-line with Cox Automotive estimates but below expectations for the overall industry. The auto data firm forecast U.S. auto industry sales to be up 5.5% from a year earlier.
Buick was the only GM brand to report a sales increase during the quarter, up 16.4% from a year earlier. The GMC truck brand was off about 5%, while Cadillac and Chevrolet were both off about 2%.
GM reported sales of its full-size pickups totaled roughly 197,000 units during the first quarter, up 3.6% from a year earlier, marking its best performance during that time since the first quarter of 2020.
“GM gained retail market share year-over-year with strong mix and pricing, our inventories are in good shape heading into the spring, and production and deliveries of Ultium Platform EVs are rising, led by the Cadillac Lyriq. We’re on plan,” GM North America President Marissa West said in a statement.

Electric vehicle sales

Sales of GM’s all-electric vehicles, closely watched by Wall Street, remained miniscule during the first quarter. EV sales totaled 16,425 units, or 2.8% of the automaker’s overall sales during the period.

GM is in the process of ramping up production of its newest EVs, including the Cadillac Lyriq and the Blazer EV, while winding down sales of Chevrolet Bolt models, which were discontinued in December.
First-quarter sales of the Blazer EV were limited, totaling 600 units, due to a stop-sale that was in effect from late December until early March to resolve software issues.

Hyundai and other automakers

Other automakers reported varying results for the first quarter, as inventories and sales normalize to levels not seen since before the Covid-19 pandemic began.
Hyundai Motor America CEO Randy Parker noted the industry is getting more competitive as automakers attempt to maintain profits of recent years without oversubsidizing sales.
“The market is changing swiftly, and it’s gotten a lot more competitive,” Parker said Tuesday during a media call.
Hyundai reported its best March sales ever last month, at 76,920 vehicles sold, but its first-quarter sales were only up 0.2% compared to a year earlier.
Separately, Hyundai’s Genesis luxury brand reported sales of 14,777 vehicles during the first quarter, up 7.3% year over year.
Here is how other major automakers performed in U.S. sales compared to the first quarter of 2023:

Toyota Motor reported a 16% increase in sales, including a 16.1% increase in March. The company sold nearly 388,000 vehicles during the first three months of the year.
Honda Motor reported a 17.3% jump in sales to nearly 334,000 vehicles sold, including a 10.1% increase in March.
Kia reported sales of 179,621 vehicles during the first quarter, off 2.5% year over year.
Nissan Group announced first quarter sales of 252,735 vehicles, a 7.2% increase from a year earlier.
EV startup Rivian Automotive reported vehicle deliveries of 13,588 vehicles during the first quarter, up from 7,946 vehicles a year earlier. The company reaffirmed guidance for annual production of 57,000 total vehicles, including 13,980 during the first three months of the year.

Don’t miss these stories from CNBC PRO: More

The average homeowner with a near record-low mortgage rate would see their monthly payment shoot up 132%, or roughly $1,800, in order to move up to a 25% more expensive home.
Buying the same home they’re in now would increase their monthly payment by 60%.
Home prices in February were 5.5% higher than they were a year earlier.

The spring housing market is defying expectations that prices would cool and competition would ease.
Higher mortgage rates usually cool both prices and demand, as they did last year, but that’s not the case now. There are still too few homes for sale because current homeowners can’t afford to move, and it’s keeping prices high.

Home prices in February were 5.5% higher than they were in February of last year, according to CoreLogic. That annual comparison is shrinking slightly, but the price gain from January to February was nearly twice what it normally is for that time of year, suggesting this spring’s market started out strong despite higher interest rates.
The average rate on the 30-year fixed mortgage hit its latest high in October, briefly crossing over 8%. It then dropped back into the 6% range for much of December and all of January. It rose back over 7% in February, which should have cooled the market.
But sales of newly built homes, which are counted by contracts signed during the month, were nearly 6% higher in February year over year. Pending sales of existing homes, also based on signed contracts, were down 7% that month from the year before, but not for lack of demand.

Lock-in effect

The real trouble in today’s existing home market is lack of supply. There are more new listings this spring than last, but supply is still 40% below where it was pre-pandemic.
That’s partly because current homeowners are plagued by a lock-in effect: They won’t list their homes for sale because the cost of moving up is so high.

In the 22 years before the Federal Reserve started raising rates in 2022, upgrading to a 25% more expensive home would have increased the average homeowner’s monthly payment of principal and interest by 40%, or about $400 on average, according to data from ICE Mortgage Technology. Moving to a similar house across the street wouldn’t change their payment at all.
In stark contrast today, the average homeowner with a near record-low mortgage rate would see their monthly payment shoot up 132%, or roughly $1,800, in order to move up to a 25% more expensive home. Buying the same home they’re in now would increase their monthly payment by 60%, according to ICE.
Those increases represent national averages and can vary market to market. For example, moving up would add $604 to a homeowner’s monthly payment in Buffalo, New York, an increase of 108%; and $4,517 in San Jose, California, an increase of 161%, according to the ICE data.
“Lower rates would ease the calculation for many and make moves more reasonable. But the net result continues to be too few homes for too many buyers,” said Andy Walden, ICE’s vice president of enterprise research. “Until that fundamental mismatch is addressed, simple supply and demand will continue to press on both inventory and affordability.”

What rate would unlock the market?

If rates fell to 6%, the monthly payment increase to trade up to a 25% more expensive home would ease from a 103% average jump to 88% – a modest but welcome improvement, according to Walden.
If rates fell to 5%, moving up would require a 68% larger payment, still much higher than the long-run average of 39%, but perhaps enough to motivate someone with a compelling need or desire to upgrade.
While not all borrowers have record-low rates, more do in pricey markets because the breakeven point on the cost of a refinance is typically lower for higher-balance borrowers, so they have more incentive to do it. They also likely have higher-balance loans, so moving up to a higher rate would be even costlier. That’s why the lock-in effect is stronger in much of California, where homes are most expensive.
The vast majority of borrowers today, 88.5%, have mortgages with rates below 6%, according to Redfin. Roughly 59% have rates below 4%, and close to 23% of homeowners have rates below 3%.
Those shares are slightly lower than they were last year, because some people did choose to move in the last year, but it shows what the market is up against, especially given high and still-rising home prices.
A new report from Zillow shows the U.S. now has a record-high 550 “million-dollar” cities, or cities where the typical home is worth $1 million or more. That is 59 more million-dollar cities than there were in 2023, when home values were weakening due to rising mortgage rates.  

Don’t miss these stories from CNBC PRO: More

Private equity firm Silver Lake announced it’s acquiring Endeavor Group Holdings for $27.50 a share.
Endeavor’s stock rose after briefly being halted ahead of the news.
Endeavor is the majority owner of TKO Group Holdings, which will remain public as part of the deal.

Ariel Emanuel, Chief Executive Officer, Endeavor, at the New York Stock Exchange, April 29, 2021.
Source: NYSE

Private equity firm Silver Lake announced Tuesday that it’s acquiring entertainment company Endeavor Group Holdings for $27.50 a share.
Endeavor’s stock rose more than 2% Tuesday afternoon after a brief halt ahead of the announcement. It was trading just under $26 per share.

Silver Lake will acquire 100% of the shares it does not already own. Endeavor is being acquired at an equity value of $13 billion, according to a release from the entertainment company.
The transaction is expected to close by the end of the first quarter of 2025. 
“We believe this transaction will maximize value for all of Endeavor’s public stockholders and are excited to continue to unlock and invest in the growth opportunities ahead as a private company,” Endeavor CEO Ariel Emanuel said in a statement.
Endeavor works on talent representation, through agency WME, along with brand licensing and live events. It has undergone a shift in recent years.
In 2022, the company acquired OpenBet, a sports betting platform. In 2023, it sold IMG Academy, a sports education institution, in a $1.25 billion deal.

Endeavor is also the majority owner of TKO Group Holdings, which owns the UFC and WWE. TKO will remain a publicly traded company as part of the deal.
Endeavor previously said it would explore strategic alternatives, including a possible sale.
Silver Lake initially invested in Endeavor in 2012 and supported the company’s acquisition of UFC in 2016. Silverlake’s co-CEO Egon Durban and managing director Stephen Evans were members of Endeavor’s board ahead of the acquisition.

Don’t miss these stories from CNBC PRO: More