General Motors (GM) has proven its resilience once again, reporting a $3 billion profit for the third quarter of 2024, despite facing challenges in both the U.S. and Chinese markets. The Detroit-based automaker announced that it achieved $48.8 billion in revenue from July through September, marking a 10% increase compared to the same period last year. The results underscore GM’s ability to navigate a fluctuating market environment, as the company managed to outperform Wall Street’s revenue and profit expectations.
U.S. Sales Remain Strong Despite Fleet Decline
While GM’s overall sales in its most profitable market, the U.S., fell by 2.2% during the quarter, the decline was largely attributed to a drop in sales to large fleet buyers. In contrast, sales to individual consumers—a more lucrative segment for the company—rose by 3%. This boost helped offset the decrease, keeping U.S. sales steady despite the broader market challenges.
Chief Financial Officer Paul Jacobson noted that the average sale price of GM vehicles in the U.S. remained consistent at over $49,000, reflecting steady consumer demand. “The consumer has held up remarkably well for us,” Jacobson said. He expressed optimism for the coming year, pointing out that the Federal Reserve’s efforts to lower interest rates could further ease borrowing costs, supporting stable demand.
Challenges in China: Restructuring Underway
One of GM’s longstanding challenges has been its joint venture in China, which posted a $137 million loss for the quarter. This marks a significant downturn from the $192 million profit the venture enjoyed a year ago. According to Jacobson, the loss is primarily due to intense competition from domestic Chinese brands that offer well-built, cost-effective products.
GM is working closely with its partner, SAIC, to address these issues through restructuring efforts. “We haven’t instituted any of the real restructuring yet,” Jacobson said, adding that while sales are improving and inventory levels are down, there is still work to be done. Key meetings are scheduled for the fourth quarter to outline a comprehensive strategy to revive the business.
North American Profits and Electric Vehicle Progress
Despite challenges in other areas, GM’s North American segment remains a bright spot. The company reported a 13% increase in pretax profits, totaling $3.98 billion. Additionally, losses at GM’s Cruise autonomous vehicle unit narrowed to $435 million. While Cruise continues to face regulatory hurdles, including the loss of its license to operate robotaxis in California, it has resumed testing with safety drivers in select markets.
GM is also making strides in the electric vehicle (EV) sector. The company sold 32,000 EVs in the third quarter and continues to work towards making its EV lineup profitable. CEO Mary Barra mentioned in a letter to shareholders that the company expects to produce 200,000 electric vehicles by the end of this year. GM’s EV discounts are currently 11 percentage points below the industry average, a sign of strategic pricing aimed at boosting adoption.
Optimistic Financial Outlook for the Year
The company’s third-quarter performance prompted GM to revise its full-year financial guidance. While the company has raised the lower end of its net income estimate to $10.4 billion, it has slightly reduced the top end of the range from $11.4 billion to $11.1 billion. The adjustments reflect both the successes and ongoing challenges the company faces in different regions and market segments.
Jacobson remains confident about the company’s outlook, citing strong individual sales in the U.S. and continued efforts to improve performance in China. “Nothing that we’ve seen has changed from where we’ve been the last several quarters,” he said, expressing optimism that GM can maintain its momentum as it heads into the final quarter of the year.
Looking Ahead: GM’s Strategic Moves
As GM works to strengthen its position globally, its strategy includes a mix of bolstering core U.S. sales, restructuring its Chinese operations, and expanding its EV portfolio. The automaker’s ability to maintain profitability amid diverse challenges highlights its adaptability and strategic planning.
In the face of competition, particularly in the EV market, GM is pushing to build awareness of its electric offerings and improve profitability in this segment. “We’re seeing demand start to inflect a little bit higher as we’re building awareness out there for the products,” Jacobson said.
While challenges remain, especially in international markets, GM’s solid third-quarter performance underscores its resilience and strategic agility. With restructuring plans in place and a focus on growth areas like electric vehicles, the company appears well-positioned to navigate an evolving automotive landscape.
