What happened

Auto stocks were under pressure for much of 2022 on fears that a slowing economy and rising interest rates would eat into demand for autos. A combination of easing fears about a recession, and General Motors (GM 4.97%) reporting earnings that showed no signs of a slowdown, moved GM shares into the fast lane in January.

Shares of the automaker were up 16.9% for the month, according to data provided by S&P Global Market Intelligence.

So what

General Motors and other automakers didn’t have a lot of supporters through much of last year. After a pandemic-induced period of little inventory due to flush consumers and disrupted supply chains, supply finally began to catch up to demand in the second half of 2022. That, coupled with fears that as the economy weakened, consumers would shy away from big-ticket purchases, has had investors watching on the sidelines.

But macroeconomic sentiment shifted in January, with an increasing number of investors gaining confidence that the Federal Reserve would be able to fight back inflation without sending the economy into a tailspin.

Late in the month, General Motors provided numbers that suggested any fears about the economy in 2022 were overblown. The automaker easily beat analyst expectations on revenue and earnings, saying demand for top models held up strong. General Motors also said it has no intention of matching price cuts on electric vehicles announced by Tesla and Ford Motor Company, which was viewed as a sign the automaker is confident demand will hold up.

Now what

Indeed, General Motors has high hopes for 2023. The automaker said it expects to earn between $6 and $7 per share for the year, offering significant upside to the consensus $5.81-per-share estimate. GM expects to generate automotive free cash flow of between $5 billion and $7 billion for the year, and said it is on track to produce 400,000 electric vehicles for the year.

GM believes it can double company revenue to upwards of $300 billion annually by 2030.

There are still risks here, as we aren’t yet sure what the Fed will or won’t do in the months to come and have no way of knowing how the markets will react. GM and the entire auto sector could still end up facing a more difficult year the company is forecasting right now.

But whatever happens, GM appears poised to survive and gain share from here. Investors buying in here have reason to have high hopes about the future.