(Bloomberg) -- General Motors Co. signaled solid US demand for its highest-margin vehicles even as the broader market softens, posting better-than-expected results for the latest quarter and raising the low end of its full-year profit forecast.
The carmaker on Tuesday shored up its 2024 adjusted earnings before interest and taxes forecast to at least $14 billion, up from the minimum of $13 billion it had previously projected.
While some rival automakers are cutting prices and boosting incentives to reduce inventory, GM has been able to hold the line on high-demand vehicles like its gas-powered GMC Yukon SUV and Chevy Silverado pickup. Profits from those models more than offset losses from a growing electric vehicle business and continued red ink in China.
“Our year-over-year performance has been very strong,” Chief Financial Officer Paul Jacobson said on a call with reporters. “We’ve been able to grow retail share with above average prices, below average incentives and well managed inventory. This has put us in a position to update guidance once again.”
Industry-wide US new vehicle sales have fallen for the past two quarters, with the decline accelerating to 1.9% in the most recent three-month period. High sticker prices and financing costs are dissuading some would-be buyers. But GM has been able to maintain its margins with a combination of price discipline and well-managed inventories.
In the quarter ended Sept. 30, GM said its net income came in flat at $3 billion, or $2.96 a share on an adjusted basis, up from $2.28 a year ago and also above the $2.45 per share average of analyst estimates compiled by Bloomberg.
Shares of the company rose 8.2% — the biggest jump in nine months — to $52.95 as of 9:45 a.m. in New York. The stock is up about 47% this year.
GM hiked its adjusted automotive cash flow guidance for all of 2024 to a range of $12.5 billion to $13.5 billion, a significant boost from a prior projected high of $11.5 billion. With that kind of cash expected to come in, it has stepped up stock buybacks, repurchasing almost 250 million shares over the past year.
That’s a big reason for the per-share adjusted earnings beat and gains from a year ago, the company said. On a net basis, the carmaker actually trimmed the high end of its full-year outlook slightly by $300 million to $11.1 billion.
GM is currently losing money on its battery-powered models, even as it has boosted production and deliveries of EVs. Chief Executive Officer Mary Barra told analysts on a conference call Tuesday that her company is working to turn a profit on its EVs “as quickly as possible.”
Barra also said that GM is prepared to make adjustments to its manufacturing plans to handle any shifts in trade policy, such as new tariffs, in the wake of the US presidential election on Nov. 5.
“We’ll continue to engage constructively with the policy making process regardless of the election outcome,” she said. “We’ll make adjustments to the extent that we can to continue to drive growth and profitability.”
The strong overall performance in GM’s home market contrasted with continued losses in China. The Detroit-based carmaker posted a $137 million third quarter loss in its second largest market, compared to a profit of $192 million a year ago. It has lost almost $350 million in China so far this year over three straight quarters of red ink.
“We believe we can turn around the losses,” Barra said on the conference call. “We have to play in areas that are our strength.”
GM is responding by focusing on making EVs locally, importing some premium models and cutting staff in Chinese market-related departments, including research and development, Bloomberg has reported.
Despite those problems, GM said its global revenue rose more than 10% in the most recent quarter to $48.8 billion and automotive free cash flow jumped 19% on an adjusted basis to $5.8 billion.
Jacobson said GM will provide formal full-year guidance for 2025 in January, but reiterated a comment he made earlier this month that profits next year likely would be in line with those earned in 2024.
--With assistance from Craig Trudell.
(Updates from seventh paragraph with opening shares; Adds CEO comments on US election from conference call.)
©2024 Bloomberg L.P.