With the strong quarterly results, General Motors is now on track to meet its full-year target of net income in a range of $9.6 billion to $11.2 billion.
(Photo: Reuters)
New York, Detroit The US automaker General Motors is successfully fighting the looming recession and has surprisingly increased its profits. Net profit improved in the third quarter by more than a third to 3.3 (previous year 2.4) billion dollars, as the largest US car company announced on Tuesday.
Thanks to higher prices, sales rose by more than half to just under $42 billion. In a letter to shareholders, CEO Mary Barra cited better delivery terms as one reason for the increase. The group successfully braces itself against the headwind. The stock gained more than 4 percent in US morning trade.
With the strong quarterly results, General Motors is now on track to meet its full-year target of net income in a range of $9.6 billion to $11.2 billion. This put investors in a good mood. In the run-up to the figures, analysts had feared that the Detroit automaker could suffer more from the economic downturn because US consumers are having trouble with higher prices and higher interest rates. GM CFO Paul Jacobsen countered that no direct effects had been identified. “Prices remain strong. Demand remains strong,” he told reporters.
GM warned investors ahead of the earnings release that results for the quarter could fall short of expectations. According to experts, the industry is facing a downturn due to high inflation and ongoing procurement problems.
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GM explained that the volume, which had increased due to the better availability of semiconductors, led to the fact that the special boom subsided. The large car manufacturers have recently benefited from the fact that the high demand can hardly be met due to material shortages and they have been able to push through higher prices. GM estimated this effect for the third quarter at $2.1 billion. This was offset by increased logistics costs of 3.6 billion dollars.
GM relies on new e-models
GM made around 90 percent of its operating profits in its home market in the USA, primarily with lucrative SUVs. The group also announced that there are now 170,000 reservations for the new Chevrolet Silverado electric pickup, which is scheduled to hit dealerships next spring.
Wedbush analyst Dan Ives called the numbers an “important step in the right direction for the Detroit group.” Despite the supply chain problems, GM presented “solid results” for the third quarter. In view of the economic slowdown, the strong profit is impressive.
“Since GM will be launching a range of electric car models in the next 12 to 18 months,” the group is in a crucial phase, according to Ives. In addition, the test drives of the Autopilot subsidiary Cruise are “the focus of interest”. According to GM, around 400,000 miles have now been completed here without a driver. Ives leaves the price target at $42 – five dollars above Tuesday’s rate.
Evercore analyst Chris McNally also praised the company’s electrification strategy. The mid-size car Equinox presented in September is the first “GM electric car for the mass market” with a sales potential of 100,000 to 200,000 units per year.
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