General Motors Reports $3 Billion Profit Despite Sales Challenges

General Motors (GM) has successfully reported a third-quarter profit of $3 billion, despite facing challenges such as declining U.S. sales and financial losses in its joint venture in China.

For the third quarter, GM’s revenue totaled $48.8 billion, which is a 10% increase compared to the same period last year. This boost was supported by consistent average vehicle sale prices in the U.S. exceeding $49,000.

Chief Financial Officer Paul Jacobson mentioned that although overall sales in the U.S. dropped by 2.2% during the quarter, this decline mainly stemmed from reduced sales to large fleet buyers. Sales to individual customers, which are typically more profitable, actually increased by 3%.

Jacobson reassured analysts that GM has not experienced the same issues as some competitors who have excess inventory of high-priced vehicles, as many consumers are still purchasing GM products. He expressed confidence that the trend would continue next year, especially as the Federal Reserve lowers interest rates, making borrowing more affordable. "Nothing that we've seen has changed from where we've been the last several quarters," he stated.

Excluding special items, GM’s adjusted earnings were $2.96 per share, surpassing Wall Street projections of $2.38, and revenue also exceeded estimates, coming in above $44.67 billion.

Following the announcement, GM’s stock saw an increase of 2% before markets opened.

Conversely, the company’s joint venture in China recorded a loss of $137 million, a significant shift from the $192 million profit reported in the previous year. Jacobson attributed this downturn to challenging market conditions in China, where domestic brands are producing competitively priced and high-quality vehicles.

He mentioned that GM is collaborating with their partner, SAIC, to restructure their Chinese operations, and anticipates several crucial discussions in the upcoming fourth quarter. "We've not yet initiated any significant restructuring, but sales are increasing and inventory levels are decreasing. We believe the situation is getting better, but there’s still work to be done with our partner," he added.

In North America, pre-tax profits rose by 13% to reach $3.98 billion. Meanwhile, losses in the Cruise autonomous vehicle division were reduced to $435 million. After facing issues, including the loss of its robotaxi operating license in California following a crash, Cruise has restarted testing, including the use of human safety drivers in three markets and continued driverless testing in Houston.

Thanks to its solid third-quarter results, GM has adjusted its full-year net income forecast, raising the lower end but lowering the upper end of its projection. The company now projects a net income of between $10.4 billion and $11.1 billion, replacing a previous range of $10 billion to $11.4 billion.

During the quarter, GM sold 32,000 electric vehicles (EVs), with discounts averaging 11 percentage points lower than the industry average. CEO Mary Barra mentioned to shareholders that GM is actively working towards achieving profitability with its EV line, expecting to produce around 200,000 EVs this year. Jacobson noted, "Demand is starting to pick up slightly as we increase awareness of our products."

GeneralMotors, Profit, Sales