DETROIT -- Not even a blockbuster sales month could pull GM out of its financial doldrums in the second quarter. GM followed up its worst financial quarter in 13 years with another bad one, especially in North America.
Ford Motor Co. also took a big hit in its North American automotive operations. Now Ford has joined GM in withholding quarterly earnings guidance.
After posting a net loss of $1.10 billion in the first quarter, GM said it lost $286 million in the second quarter, dragged down by a $1.19 billion shortfall in the North American automotive business.
Revenue fell 1.5 percent to $48.51 billion, from $49.25 billion a year earlier.
In the second quarter of 2004, GM earned $1.38 billion, including $355 million in North America. But the company now has lost money for three straight quarters, its longest unprofitable stretch since 1992.
All of the bad news overshadowed a 1.1 percentage point increase in North American market share during the quarter - built mainly on the sales surge in June, when GM began offering employee discounts to every buyer.
"But on the minus side, GM North America's financial performance continued to be very disappointing," GM CEO Rick Wagoner said in a statement.
Lower production, sluggish truck and SUV sales and rising health care costs were blamed.
CFO John Devine said GM needs to cut costs to turn around its North American operations. He said material and health care costs, as well as lower sales of its most profitable vehicles, continue to dog the company.
Devine said GM will continue to reduce capacity in North America and work with the United Auto Workers to reduce health care costs. Trimming those costs "will have the largest impact on our profitability," he said.
GM provided no outlook for its financial results in the third quarter. Some analysts are concerned about the future.
After announcing an 18.8 percent income drop for the second quarter last week, Ford joined GM in withholding quarterly earnings guidance. Ford, unlike GM, is still providing full-year guidance for 2005. Ford expects a full-year profit of $1.84 billion to $2.3 billion.
But all those profits will come from Ford's financial services unit, primarily Ford Motor Credit. Ford CFO Don Leclair last week said that the company's automotive operations would post a loss for 2005. Until April, Ford had been counting on automotive pre-tax profits of at least $1.5 billion for the full year.
"Our market share performance has been disappointing in the first half, particularly in North America," Leclair said.
North American volume and vehicle pricing are falling even as costs rise, he said. Ford's North America automotive operations posted a pre-tax loss of $907 million during the second quarter, a swing of $1.36 billion from year-ago profits of $454 million.
Worldwide automotive losses on a pre-tax basis were $245 million in the second quarter. Ford Credit earned pre-tax profits of $1.2 billion, down $229 million.
Ford reported net income of $946 million in the second quarter, down from $1.17 billion in the year-ago second quarter. Revenue was $44.55 billion, up 3.9 percent.
You may e-mail Jason Stein at
You may e-mail Amy Wilson at