General Motors raises profit guidance thanks to ‘resilient’ consumers

General Motors has raised its full-year profit guidance amid resilient demand for trucks and SUVs, sending the US automaker’s shares up sharply.
America’s largest carmaker by sales said it now expects to deliver between $14 billion and $15 billion in pre-tax profit, up from mid-year’s $13 billion to $15 billion range, due to strong pricing and consumer spending.
Shares in GM closed up $4.79, or 9.8 per cent, at $53.72 in New York on Tuesday night. The stock has risen almost 50 per cent since the start of the year, beating its rivals Stellantis and Ford Motor Company, whose share prices have fallen over the same period.
Paul Jacobson, chief financial officer, said: “The consumer has held up remarkably well for us.”
GM, founded in 1908 and based in Detroit, Michigan, produces vehicles under the Chevrolet, GMC and Buick marques.
Third-quarter revenue of $48.8 billion surpassed Wall Street estimates of $44.6 billion. The automaker delivered pre-tax profit of $4.1 billion for the three months to the end of September, up from $3.6 billion a year earlier.
The company said it was making progress on electric vehicle profitability, with rising sales and growing market share. Its range of redesigned SUVs are more profitable than the outgoing models, it said. On its earnings call, GM reassured shareholders it would work quickly to build an EV that was profitable on a pre-tax basis.
The group offers four EVs in its Cadillac line-up. Its electric sales have risen every quarter this year as it increases production of models, including the Silverado EV truck and Equinox electric SUV. However, EVs accounted for only about 4 per cent of the group’s total American deliveries through the third quarter.
Mary Barra, the chief executive, said EV consideration was “much stronger among luxury customers than the mainstream market”.
Garrett Nelson, an analyst at CFRA Research, said GM could lose market share in the near-term owing to its lack of hybrid vehicles and free cashflow will be hampered by its capital spend on EV shift.
The automaker had total capital expenditures of about $2.3 billion in the quarter to the end of September, down from about $2.5 billion a year ago.
GM is still facing challenges in China, the second-largest world economy, where it posted a loss of $210 million in the first half of the year. It lost another $137 million in the region in the third quarter and is planning to restructure its operations there.