GM showed strong Q3 numbers as the automaker’s success and confidence assuaged mounting concerns of a global recession.
The company’s strong North American truck sales and prices led a higher quarterly profit that exceeded analysts’ expectations. Indeed, this sent General Motors shares up about 2% in early trade on Tuesday.
Investors have expressed fear that a slowdown in the American economy could reduce the market for new cars, but Chief Financial Officer Paul Jacobson stated on Tuesday: “No immediate effect has been noticed on our products. Pricing is still robust. Demand is still quite high.”
In the short term, “we’re still feeling very positive,” Jacobson continued, adding that GM anticipates 15 million in industry sales in the United States next year as opposed to 13.7 million this year.
Moreover, the findings, according to Wedbush analyst Dan Ives, are a “significant step in the right direction for the Detroit mainstay.”
On a teleconference with analysts on Tuesday, Chief Executive Mary Barra displayed more restraint, calling the current operating climate “difficult”. But, Barra pointed to a “gradual improvement” in supply chains, especially semiconductor chips.
“Nearly 75% of the incomplete vehicles we kept in the business inventory were completed and shipped in June,” according to Barra.
Ford Motor Company had warned in mid-September that it would have 40,000 to 45,000 vehicles in inventory without parts, Furthermore, supplier costs related to inflation were running about $1 billion higher than anticipated. However, GM’s strong Q3 numbers stood in stark contrast to Ford Motor Company’s pessimistic remarks.
On Wednesday, Ford releases its third-quarter earnings.
GM reiterated its guidance for full-year diluted earnings per share of $5.76 to $6.76 and full-year net income of $9.6 billion to $11.2 billion.
In the third quarter, diluted earnings per share of $2.25 exceeded expectations of $1.88.
The automaker’s net income increased to $3.3 billion from $2.4 billion in the prior year. Revenue increased significantly from $26.8 billion to $41.9 billion.
To support EV growth after 2025, GM stated it is still negotiating supply agreements and making direct investments in raw materials.
