General Motors overcomes US sales drop and China losses to post 3rd quarter profit of $3 billion

[October 22, 2024]  By TOM KRISHER

DETROIT (AP) — U.S. sales are down and a once-reliably profitable joint venture in China is losing money, but General Motors still managed to post a third quarter profit of $3 billion Tuesday, slightly less than it made a year ago.

The Detroit automaker reported $48.8 billion in revenue from July through September, 10% more than last year, aided by U.S. average vehicle sale prices that were steady with last quarter at over $49,000.

Chief Financial Officer Paul Jacobson said that while overall sales in the U.S., GM's most profitable market, fell 2.2% in the quarter, much of that drop was from sales to large fleet buyers. Sales to individuals, which generally are more profitable, rose 3%.

While other automakers have gotten stuck with too many high-priced vehicles when many buyers are looking for lower costs, GM has yet to see such a shift, Jacobson told reporters.

“I think that the consumer has held up remarkably well for us,” he said, adding that next year should be consistent with this year as the Federal Reserve continues to reduce interest rates and lower borrowing costs. “Nothing that we've seen has changed from where we've been the last several quarters.”

Excluding one-time items, GM had an adjusted profit of $2.96 per share, beating Wall Street estimates of $2.38, according to FactSet. The company’s revenue also soundly beat estimates of $44.67 billion.

Shares of General Motors Co. rose 2% before the opening bell Tuesday.

The company’s joint venture in China, though, lost $137 million, compared with a $192 million profit a year ago. Jacobson said the loss is a symptom of tough market conditions there, where domestic brands are turning out well-built products at low costs.

The Chevrolet logo is seen at a new and used vehicles dealership in Palatine, Ill., on March 20, 2024. (AP Photo/Nam Y. Huh)

The company, he said, is working with partner SAIC on restructuring the business, with several key meetings in the fourth quarter.

“We really haven’t instituted any of the real restructuring yet,” he said, adding that sales are up and inventory is down. “We believe that the situation is improving, but there’s still work to do with our partner,” he said.

Pretax profits in North America rose 13% to $3.98 billion, while losses narrowed to $435 million at the troubled Cruise autonomous vehicle unit. Cruise lost its license to run robotaxis in California after a San Francisco crash last year. The unit has resumed testing with human safety drivers in three markets and driverless testing in Houston.

The third-quarter performance allowed GM to raise the low end of its full-year net income guidance, but it lowered the top end of the range. The company now expects to make $10.4 billion to $11.1 billion, compared with $10 billion to $11.4 billion previously.

GM said it sold 32,000 electric vehicles during the quarter, with discounts that were 11 percentage points below the industry average. CEO Mary Barra said in a letter to shareholders that GM continues to make progress toward EV profitability. The company expects to produce 200,000 of them this year.

“We’re seeing demand start to inflect a little bit higher as we’re building awareness out there for the products,” Jacobson said.

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