DETROIT -- General Motors -- even without a record $37.38 billion in special noncash charges to its balance sheets -- suffered a difficult third quarter as its North American automotive business weakened.
Globally, GM will see ongoing revenue growth on the strength of emerging markets, but executives remain concerned over pressure in the United States.
About 36 percent of our automotive revenues were generated outside of North America, so that shows you how important North America still is to our automotive business, GM CFO Fritz Henderson said during a conference call with analysts and reporters.
GM stock finished the day down $2.21, or 6.1 percent, to close at $33.95.
In North America, GM posted a net loss of $247 million in the quarter compared with a loss of $660 million in the year-ago quarter. GMs revenue from sales in North America was down $181 million in the quarter to $26.61 billion compared with $26.79 billion a year earlier.
Henderson said he remains skeptical of the U.S. market going forward, noting a seasonally adjusted selling rate of 16.1 million units when 17 million is more the norm.
Weve seen 16.1 million in October, and we candidly think that will continue, he said. I am not saying we are signaling substantial weakness from today, but I do think that level will continue.
Some vehicles are doing well
During the question and answer session of the conference call, Henderson said the profits from the new GMC Acadia, Buick Enclave and Saturn Outlook crossovers are better than the mid-utilities but not as robust as what we have in our full-sized utilities.
GMs new crossovers have been key contributors to GMs North American income.
Regarding the Malibu, were very encouraged by early market acceptance, and we think we can do more volume with this new car versus the old model at retail, Henderson said.
In North America, GMs revenue per vehicle is up by $1,410 to $21,605 in the quarter compared with a year earlier. It is up $230 per vehicle compared with the second quarter.
On a global basis, GM said its auto operations improved in the third quarter. The automaker posted net income of $122 million from continuing operations in the quarter, compared with a loss of $455 million on the same basis a year earlier.
The massive $37.38 billion in noncash charges stemmed from unclaimed tax credits and a loss at its former finance subsidiary, GMAC Financial Services. Those results also include a one-time $3.5 billion gain from Allison Transmission, a unit GM spun off in August.
Including those one-time charges, GM posted a third-quarter net loss of $38.96 billion compared with a loss of $147 million a year earlier.
Excluding one-time items, GM reported a total third-quarter net loss of $1.59 billion on revenue of $43.83 billion compared with net income of $497 million on revenue of $48.89 billion during the same quarter last year.
The dropoff in total revenue stems from GM no longer accounting for GMACs revenues on its books. GMAC accounted for $9.28 billion in revenue during the third quarter of 2006.
For the first nine months, not including the one-time charges, GM posted a net loss of $81 million on revenue of $134.22 billion compared with net income of $2.0 billion on revenue of $154.87 billion during the same period a year ago. GMAC generated $27.14 billion in revenue during the first nine months of 2006.
More on the charge offs
GM announced Tuesday, Nov. 6, that it would take the massive noncash charges. GM said the charge against deferred tax assets was triggered by its cumulative losses over three years and the risk of both weaker auto sales and GMAC results in coming quarters.
GMs charge was triggered largely because it has been three years since it began taking charges to restructure its troubled U.S. operations. The move wipes out all the deferred tax credits it accrued over that time.
Henderson told reporters that GM might still be able to claim the tax credits if GM becomes profitable enough to justify using them.
Nothing has changed in terms of the economics of the business, he said.
GMs results, even excluding the massive one-time charge, were weaker than analysts had forecast.
GMAC, in which GM retains a 49 percent stake, posted a $1.6 billion third-quarter loss last week triggered by a fourth consecutive quarter of losses at its Residential Capital LLC unit, the second-largest independent U.S. mortgage lender.
Henderson said weakness in the U.S. housing market is partly responsible for weaker auto industry sales, which are on track for their lowest annual total in almost a decade at about 16 million units.
Reuters contributed to this report