General Motors Co. (NYSE: GM) presented its financial results for the third quarter of 2024, which brings positive signals for investors and analysts. Despite the general decline in new vehicle sales in the United States, GM has demonstrated the ability to maintain profit margins and strengthen its position in the market, especially in the high-yield segment of models such as the GMC Yukon and Chevrolet Silverado. These vehicles, together with a balanced approach to pricing and inventory, enabled the company to exceed expectations and improve its profit forecast for the full year 2024. [1]
Results and forecast
GM posted a net profit of $3 billion in the third quarter, stable compared to the same period last year. Adjusted earnings per share came in at $2.96, significantly exceeding the analyst consensus of $
2.45. The company's total revenue grew by more than 10% to $48.8 billion,
reflecting the firm's strong performance in key segments.
GM also raised the lower end of its estimate for adjusted earnings before interest
and taxes (EBIT) to at least $14 billion, up from its original estimate of
$13 billion. [2] This increase can be understood as the company's strong confidence
in maintaining demand for its most profitable models and the ability to manage its costs even in an environment of increasing economic challenges.
Electrification and challenges in foreign markets
Despite its success in the domestic market, GM continues to face challenges in electric vehicles (EVs) and international markets. The company admits that it still generates losses on electric models, but CEO Mary Barra confirmed that GM is working to achieve profitability in this area as soon as possible. At the same time, the company also continues to increase EV production and deliveries, which should bring the expected improvement in financial results in the future. [3]
The situation in the Chinese market remains challenging for GM, as the company posted a loss of $137 million in the third quarter, down from a profit of
$192 million in the same period last year. GM is responding to these challenges by focusing on local production of electric vehicles, importing some premium models and reducing the number of employees in research and development.
Strong position in the domestic market
On the domestic market, GM was able to maintain its strong position, mainly thanks to the high margin
on its best-selling vehicles and efficient inventory management. While competitors are lowering prices while increasing sales incentives, GM remains true to its strategy of keeping prices high with minimal incentives. This approach led to a significant rise in the company's shares by 11%, [1]the largest single-day increase in almost a year. Since the beginning of the year, GM shares have risen 51%, confirming investors' confidence
in the company's ability to continue to deliver solid results. *
Conclusion
General Motors Co.'s quarterly results for the third quarter of 2024 show that the company is able to maintain its profitability and strong position
in the traditional internal combustion engine segment despite the challenges in global markets. However, the challenges of electrification
and losses in the Chinese market remain topics that investors will be watching closely.
Given the steady growth in financial indicators and the strengthening of the annual profit estimate, GM is now well positioned to take advantage of the potential recovery in demand and continue to strengthen its market position.
* Past performance is not a guarantee of future results
[1] , [2] , [3] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which is subject to change. Such statements are not a guarantee of future performance. They involve risks and other uncertainties that are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
[1] General Motors stock price performance over the past five years: https://tradingeconomics.com/gm:us
https://finance.yahoo.com/news/gm-high-prices-boost-profits-104613539.html
https://www.cnbc.com/2024/10/22/general-motors-gm-earnings-q3-2024.html
