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Business

General Motors Profit Jumps on Sales of Pricier Pickups, SUVs




General Motors Co.'s third quarter operating profit jumped 25%, as the car maker sold more pricey trucks and sports utility vehicles in its home U.S. market while sidestepping the troubles in China that has tripped up its Detroit rivals.

GM said Wednesday's operating profit for the July-to-September period-stripping out one-time factors-totaled $ 3.2 billion, a record for the quarter.

The company ordered higher prices in its two largest markets, China and the US, despite significant sales declines in each country.

Pretax earnings per share, adjusted for one-time items, was $ 1.87 a share, easily surpassing analysts 'expectations of $ 1.25 a share. GM shares surged more than 9% in premarket trading.

Net income was $ 2.5 billion. That compares with a loss of about $ 3 billion a year earlier, driven mostly by a hit from deferred tax assets that GM relinquished when it sold its European Opel AG unit in August 201[ads1]7.

Revenues rose about 6%, to $ 35.8 billion, slightly higher than analysts' forecasts. GM reiterated its full-year operating profit outlook of $ 5.80- $ 6.20 per share, saying it expects to be at the top end of that range.

The nation's largest car company by sales is striving to maintain healthy profit margins as top two markets-China and the U.S.-come under pressure.

GM's sales in China fell in the third quarter 15%, while U.S. sales dropped 11% in the same period.

In the U.S., GM dialed back spending on consumer discounts, which helped protect its bottom line but dented sales. It sold lesser-margin passenger cars, while selling a richer mix of large SUVs such as the Chevrolet Tahoe, helping boost the average selling price to around $ 36,000, a record for the quarter.

"We had a ton of pricing discipline This quarter, "GM Finance Chief Dhivya Suryadevara told reporters Wednesday.

Operating profit in North America surged 37% to $ 2.8 billion. GM said its operating margin in the region was 10.2%, despite the drop in sales volume and pressure from tariff-related commodity cost increases.

In China, GM's Cadillac luxury brand posted record sales during the quarter. That helped the company combat a broader decline in new-vehicle demand in the country, the Chinese car market's first major slowdown in years. GM's third quarter income from joint ventures in China rose 6%, two $ 485 million.

Despite the headwinds in China, the world's largest car market remains a key source of profit for GM, which fails with GM

            Volkswagen
             AG

      as the top-selling car maker in the country.

GM is on track bringing about $ 2 billion in operating profit from China this year, while

            Ford Motor
             Co.

      duck

            Fiat Chrysler Automobiles
            

      NV has swung to lose there.

Still, collectively the results from the three Detroit auto makers show their growing reliance on truck and SUV sales in North America to fuel the bottom line, as it gets tougher to do business in other key markets overseas.

Fiat Chrysler recorded Tuesday record record profit in North America for the third quarter, while performance in Europe and China worsened. Ford posted similar lopsided results last week, with North America driving the bulk of its profit during the period as the company's international operations continued to weaken.

Analyst estimates sales of pickup trucks and large SUVs in the U.S. account for 50% to as much as 80% of the three Detroit companies' profits.

Write to Mike Colias at Mike.Colias@wsj.com



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