General Motors managed to almost double its third-quarter net profit in North America thanks to rising SUV and truck sales, allowing the automaker to counterbalance its financial woes in Europe and South America.
GM reported that its net income from July through September was at $1.38 billion, which equals to 81 cent per share. Last year, the company made $698 million – or 45 cents per share.
The automaker has been plagued by recalls for a good chunk of 2014 – most of which were connected to the deadly ignition switch defect – so it’s no surprise that the sales have suffered as a result. GM has ordered 75 recalls this year, which covered over 30 million vehicles and cost $2.8 billion, if not more.
Since the third quarter was not affected by any significant recalls, GM has managed to start a steady climb back to the top. In fact, without $331 million in on-time items, the company would have earned 97 cent per share, which exceeds the predictions of Wall Street analysts, who expected the amount to be 95 cents.
The analysts were also wrong when they expected GM’s revenue to be at $38.79 billion, since the actual amount ended up being $39.25 billion – a growth of 2 per cent.
By revamping several of its trucks and SUVs, GM managed to increase its pre-tax profit by 12.1 per cent to $2.4 billion here in North America. The amount of revenue the company can keep is at 9.5 per cent. By contrast, the company’s pre-tax profit in China went up by 14 per cent to $484 million.
During the quarter, the GM sold the total amount of 884,000 vehicles in North America, with is an increase of 9.4 per cent. Chief Financial Officer Chuck Stevens attributes these gains to high-priced pickup trucks and SUVs.
“The new trucks and SUVs are more profitable than the ones they replaced,” he stated. “That certainly helps from a profit perspective,”
Despite that, GM’s loss in Europe went up 63 per cent to $387 million, while in South America the loss is at $32 million.
In Canada, Ford and Chrysler still lead the sales in terms of volume, putting GM into third spot.
Image courtesy of © General Motors.
