GM Shatters Wall Street Expectations: Record Profits Signal Strong Recovery
In a stunning display of financial strength, General Motors has not only crushed Wall Street’s third-quarter expectations but also raised its earnings guidance for the third time this year. The Detroit automotive giant is showing remarkable resilience despite recent labor challenges.
Breaking Down the Numbers
The results are impressive across the board. GM posted earnings of $2.96 per share, significantly beating analysts’ expectations of $2.43. Revenue soared to $48.76 billion, outperforming the predicted $44.59 billion by a wide margin. This marks GM’s ninth straight quarter of exceeding earnings estimates.
The company’s performance was particularly strong in North America, where it achieved:
- Nearly $4 billion in adjusted earnings before interest and taxes
- A solid 9.7% profit margin
- Average vehicle selling prices are holding steady above $49,000.
Raising the Bar for 2024
In response to these strong results, GM has upgraded its financial targets for 2024:
- We now expect full-year adjusted earnings between $14 billion and $15 billion.
- The earnings per share forecast has increased to $10.00-$10.50.
- The projection for automotive free cash flow has been raised to $12.5-$13.5 billion.
Success Despite Challenges
What makes these results particularly noteworthy is that they come just one year after a significant UAW strike that cost the company $1.1 billion. GM CFO Paul Jacobson revealed that the company had prepared for increased labor costs by implementing cost-cutting measures beforehand. “We’ve been able to look at that as the cost of doing business,” Jacobson stated. “No regrets over the UAW contract.”
Market Performance and Consumer Demand
The American consumer’s appetite for GM vehicles remains robust. The company delivered 659,601 vehicles in the third quarter, with retail sales climbing 3%. Electric vehicle sales showed particular promise, jumping 60% compared to last year, with 32,195 units sold.
Challenges in the East
While North American operations shine, GM faces headwinds in China:
- We posted a $137 million loss in the quarter.
- Vehicle sales dropped 37% to 372,000 units.
- Increased competition from local manufacturers
- Challenging market conditions are affecting performance.
Looking Ahead
GM’s stock has responded positively to these results, rising about 36% this year. The company’s share buyback program has been aggressive, reducing outstanding shares by 19% year-over-year.
CEO Mary Barra remains cautiously optimistic but realistic: “I’m proud that GM is delivering our best vehicles ever with strong financial results. But I want to be clear that we are not mistaking progress for winning. Competition is fierce, and the regulatory environment will keep getting tougher.”
The company expects to maintain this strong performance into 2025, projecting similar EBIT-adjusted ranges to 2024. With continued focus on optimizing traditional vehicle margins while pushing toward EV profitability, GM appears well-positioned for sustained success in a rapidly evolving automotive landscape.
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