Strong N.A. results buoy GM
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DETROIT -- Stout pricing and rising volumes in North America are propping up General Motors' bottom line.
Last week, GM posted a $1.48 billion third-quarter net profit, as strength in North America continued to blunt Europe's impact on its bottom line. Still, net income dropped 14 percent from a year earlier.
GM's European losses rose to $478 million from $292 million a year earlier, as GM slashed production 27 percent. It's on track to lose $1.5 billion to $1.8 billion in Europe this year and nearly as much in 2013.
Overall, GM said higher vehicle sales and prices vs. a year earlier added about $900 million to its bottom line. North America accounted for about two-thirds of that.
Still, higher warranty costs and other rising expenses trimmed GM's North American profit from the third quarter of 2011 to $1.82 billion before interest and taxes.
Another reason for the third-quarter profit dip was the sales mix: GM sold more small vehicles, which are less profitable. In the United States, for example, Chevrolet sold 56 percent more compact and small cars, such as the Chevy Sonic, than it did in the third quarter of 2011.
GM's two other geographic divisions posted profit growth. GM International, which includes China, India, Australia and several emerging markets, posted a $689 million pretax profit, up 89 percent, on stronger prices and higher production volume.
In South America, GM swung to a $114 million pretax profit compared with a $44 million year-earlier loss. GM expects to win back lost market share in South America.
| GM's 3rd-qtr. Tally | ||
| Profit* | Change vs. Q3 2011 | |
| N. America | $1.82 bil. | –17% |
| Europe | –$478 mil. | NA |
| International | $689 mil. | 89% |
| S. America | $114 mil. | NA |
| GM Financial | $200 mil. | 12% |
| *Earnings before interest and taxes; excludes one-time gains or charges | ||
| Source: GM | ||
You can reach Mike Colias at mcolias@crain.com.
