GM upbeat about sales after Q3 results exceed estimates

General Motors again exceeded Wall Street's expectations this year, as its third-quarter results benefited from a steady demand for its combustion-engine truck and SUVs, and lean inventories.
GM is targeting annual earnings at the top end of its earlier forecast, and CFO Paul Jacobson brushed off economic concerns for customers.
“The consumer has held up remarkably well for us,” he told reporters, while predicting better demand next year from cuts to interest rates.
GM started the year expecting to make $12bn (about R210,551,840,400) to $14bn (about R245,643,813,800) in pretax profit and raised the forecast in midyear to $13bn (about R228,044,531,000) to $15bn (about R263,104,489,500), buoyed by strong pricing and consumer spending.
The company on Tuesday said it was on track to deliver between $14bn and $15bn in pretax profit. Its shares were up about 0.7% in premarket trading.
GM's adjusted earnings per share of $2.96 (about R51.92) for the quarter outpaced market expectation of $2.43 (about R42.62), while revenue of $48.8bn (about R856,042,733,840) beat estimates of $44.6bn (about R782,366,924,780).
CEO Mary Barra has been focusing on stability, saying earlier this month that GM's profit next year is expected to look similar to this year, a relief for investors who were worried about a potential decline in the car industry's earnings.
GM has said pricing could be softer next year, but it expects results to be supported by cost cuts on SUVs and electric vehicles and improvement in China.
A weak spot in otherwise strong earnings was China, where it posted a loss of $210m (about R3,683,790,453) in the first half. GM lost another $137m (about R2,403,234,724) in the region in the third quarter and is planning to restructure its operations there.
“We really haven't instituted any of the real restructuring yet,” Jacobson said, adding that sales in the region are up and inventory down.
Investors fear that high interest rates and economic fears will catch up with consumers and dampen sales of new cars, despite the resilience seen for much of the year.
Shareholders are also queasy about carmakers' EV losses as Chinese rivals pump out affordable electric vehicles abroad and Tesla continues to dominate battery-powered vehicle sales in the US.
CFRA Research analyst Garrett Nelson said GM could lose market share in the near-term due to its lack of hybrid vehicles and free cash flow will be hampered by its capital spend on the EV shift.
The Detroit carmaker had a total capital expenditure of about $2.3bn (about R40,346,276,390) in the quarter through September 30, compared with about $2.53bn (about R44,380,904,029) a year ago.
Wedbush analyst Dan Ives called GM's forecast update and results a “large step in the right direction” as the carmaker navigates an uncertain market.
While Chinese carmakers have not yet penetrated the US market, large carmakers like GM see a threat from low-cost and hi-tech vehicles, executives have said.
GM's stock is up 36% this year, outpacing rivals Stellantis and Ford Motor, whose share prices have fallen in the same period.
Ford has struggled with costly quality problems and Stellantis witnessed lower sales and revenue in North America after it raised prices and held back on incentives.
Investors seek clarity on autonomous Cruise
GM's profit engine, traditional combustion-powered vehicles, including eight refreshed petrol SUV models through to the end of 2025, is luring many customers who are not yet ready for EVs.
Its EV sales have increased every quarter this year as it increases production of models, including the Silverado EV truck and Equinox electric SUV.
Still, EVs accounted for just about 4% of GM's total US deliveries through the third quarter.
Investors await more clarity on GM's autonomous Cruise unit, which has been under scrutiny since one of its robotaxis dragged a pedestrian last year.
The unit posted an operating loss of $400m (about R7,013,640,000) for the quarter, smaller than $700m (about R12,273,870,000) a year ago. At GM's investor day this month, Barra said the division would lose no more than $2bn (about R35,088,642,600) in 2025.
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