General Motors Reports $3 Billion Profit in Third Quarter Despite U.S. Sales Decline

Despite a decline in U.S. sales and a loss in its joint venture in China, General Motors (GM) achieved a third quarter profit of $3 billion. This figure is slightly lower than last year’s profits during the same period.

GM's revenue for the third quarter stood at $48.8 billion, marking a 10% increase from the prior year. This growth in revenue was supported by stable vehicle sale prices in the U.S., which remained above $49,000.

Sales Performance Breakdown

Chief Financial Officer Paul Jacobson noted that while overall sales in the U.S. decreased by 2.2% in the quarter, sales to individual customers, which tend to be more profitable, rose by 3%. This decline in overall sales was largely due to fewer transactions with large fleet buyers.

Jacobson indicated that many automakers are grappling with too much inventory of high-priced vehicles while demand shifts towards more affordable options. However, GM has managed to avoid this issue, as consumer demand has remained robust.

Adjusted Profits and Market Reaction

When excluding one-time costs, GM’s adjusted profit reached $2.96 per share, exceeding Wall Street’s expectations of $2.38. The revenue results also surpassed analyst predictions of $44.67 billion, which resulted in a 2% increase in GM's share price prior to the market opening.

Challenges in China and Future Plans

The company's joint venture in China faced tough challenges, reporting a loss of $137 million compared to a profit of $192 million in the same quarter of the previous year. Jacobson attributed this loss to increased competition from domestic brands offering well-constructed vehicles at lower prices.

GM is collaborating with its partner SAIC to restructure operations in China and will have significant meetings in the fourth quarter to address these issues. Jacobson expressed optimism, stating that while they have not yet implemented major restructuring, sales are increasing and inventory levels are decreasing.

North American Profits and Autonomous Vehicle Sector

Pre-tax profits in North America climbed 13% to $3.98 billion. However, the Cruise autonomous vehicle unit reported a narrower loss of $435 million. This unit faced setbacks, including losing its license to operate robotaxis in California after a crash last year, but has recently resumed testing with human drivers in three different markets.

Updated Financial Outlook and Electric Vehicle Sales

Following the positive results in the third quarter, GM updated its full-year net income guidance. The new forecast ranges from $10.4 billion to $11.1 billion, adjusting the previous range of $10 billion to $11.4 billion.

In terms of electric vehicle (EV) sales, GM sold 32,000 EVs in the quarter, with discounts offered that were notably lower than the industry average. CEO Mary Barra mentioned progress towards achieving profitability in the EV sector, with expectations to produce 200,000 EVs within the year.

Jacobson remained hopeful, stating that demand appears to be rising as awareness of their electric vehicle offerings grows.

GeneralMotors, Profit, China