Updated April 23rd, 2024 at 19:41 IST

General Motors surpasses estimates, raises forecast amid strong demand

GM increased its adjusted pre-tax profit projection for the year to a range of $12.5 billion to $14.5 billion, up from previous range of $12 to $14 billion.

Reported by: Business Desk
GM increased its adjusted pre-tax profit projection for the year to a range of $12.5 billion | Image:Chevrolet
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General Motors earnings: General Motors (GM) exceeded Wall Street expectations with its quarterly results and revised its annual forecast upwards, attributing the success to stable pricing and robust demand for its gas-engine vehicles. The Michigan-based automaker announced a 5 per cent surge in shares following the announcement.

GM increased its adjusted pre-tax profit projection for the year to a range of $12.5 billion to $14.5 billion, up from the previous range of $12 billion to $14 billion. The company's Chief Financial Officer, Paul Jacobson, attributed the positive performance to the remarkable resilience of consumers amidst higher interest rates.

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Despite challenges in the Chinese market and with electric vehicles (EVs), GM witnessed stronger-than-expected vehicle pricing with gasoline-powered trucks, which pleased investors. The company reported a net income increase of 24.4 per cent to $3 billion in the first quarter, with revenue rising by 7.6 per cent to $43 billion.

While GM's performance in the first quarter was robust, CEO Mary Barra faces significant challenges ahead, particularly in turning around the company's declining sales in China and addressing issues with Cruise, its autonomous driving unit. Cruise halted operations after an incident involving one of its self-driving cars in San Francisco, resulting in a $2.7 billion loss last year.

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Despite these challenges, Barra expressed optimism about the progress made by Cruise, including the resumption of vehicle operations in Phoenix, Arizona, earlier in the year. GM is exploring options for funding Cruise, including seeking outside investment.

In China, GM witnessed loss of $106 million in the quarter, although it was lower than expected. Barra affirmed GM's commitment to the Chinese market and expressed confidence in turning a profit in the second quarter and the full year.

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GM's focus on gas-engine trucks has helped it gain market share, particularly in the full-size pickup truck segment. The company's joint venture with LG Energy Solution, Ultium Cells, is ramping up production of battery cells in Ohio and Tennessee, signalling its commitment to the EV market.

Questions about the EV market have arisen following Tesla's recent layoffs and price cuts on its models. However, GM remains optimistic about its EV business, with Jacobson expecting positive variable profit by the second half of 2024.

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GM's stock buyback plan, totalling $10 billion, is on track, with the first tranche completed in the first quarter. The company aims to reduce its outstanding share count to under 1 billion.

Overall, GM's strong quarterly performance and revised forecast underscore its resilience amidst challenges in the automotive industry. The company's strategic focus on gas-engine vehicles and EV development positions it well for future growth and profitability.

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(With Reuters inputs)
 

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Published April 23rd, 2024 at 19:41 IST