General Motors Co reported much higher-than-expected third-quarter earnings on strong North American truck and SUV sales, calming fears that a US auto market slowdown would dent profitability.
GM said yesterday the third-quarter loss in Europe totalled about $100mn. Chief financial officer Chuck Stevens told reporters yesterday that achieving break-even results for Europe this year will be “very, very challenging.”
GM is “prepared to take whatever action is necessary” to achieve its goal of returning European operations to profitability, Stevens said, without offering specifics.
GM is impacted when the value of the pound drops because it builds many of the vehicles it sells in the United Kingdom in Germany, Spain and other countries that use the euro. Stevens said GM raised vehicle prices in the UK by 2.5% on October 1.
Overall, GM said third-quarter net income more than doubled to $2.8bn, or $1.76 a share, from a year earlier.
Excluding a $110mn gain from litigation, earnings of $1.72 a share beat the analysts’ average estimate of $1.45, according to Thomson Reuters I/B/E/S.
Revenue for the third quarter rose 10% to a record $42.8bn, boosted by production of vehicles that went onto lots at GM’s US dealers. The company said that compared to a year ago, it had 110,000 more vehicles in stock at US dealers as of September 30.
Chief executive Mary Barra has sought to convince investors that GM is not as vulnerable to the cyclical nature of US vehicle sales as in the past, and is defending against challenges from technology companies and rivals such as Tesla Motors Inc by developing its own advanced electric cars and autonomous driving technology.