DETROIT (AP) — Despite a slight drop in U. S. vehicle sales, General Motors’ net source of revenue in the first quarter rose more than 25 percent thanks to strong deliveries of pickup trucks and other more successful vehicles.
The automaker said that while its average advertising value per vehicle was lower than last year at just under $50,000, pickup truck sales remained strong and it doesn’t see the erosion of value in its lineup that other corporations have experienced in the past.
GM said Tuesday it made a profit of $2. 97 billion in the January-March period, up 7. 6% from the same period last year, to more than $43 billion. That’s more than the $41. 15 billion claimed by analysts surveyed through FactSet.
Excluding specialty items, the company gained $2. 62 per percent, beating Wall Street estimates of $2. 13 per percent by a wide margin.
Wedbush’s Dan Ives said in a note to consumers that GM has provided functionality focusing on profitability and expense management.
“This is a first quarter for GM and shows that the long-awaited turnaround seems to be underway for Barra.
GM’s better-than-expected pricing also helped the company raise its full-year net profit forecast to a range of $10. 1 billion to $11. 5 billion, from $9. 8 billion to $11. 2 billion. Earnings adjusted according to the constant percentage guidance for 2024 have risen to a range of $9 to $10 from $8. 50 to $9. 50.
Analysts expect earnings of $8. 89 consistent with the constant percentage for the year.
Shares of the company, which plans to move its headquarters from Detroit to new construction downtown next year, were up more than 5% in early morning trading.
Chief Financial Officer Paul Jacobson said costs fell because GM sold a higher percentage of lower-cost vehicles, such as the Chevrolet Trax small SUV, which starts at $21,495 adding shipping. “The portfolio overall has been pretty strong,” he said. noting that pickup truck sales were up 3% in the U. S.
The company still thinks prices will fall 2% to 2. 5% for the full year, but has yet to see a decline, Jacobson said.
Retail sales of electric cars rose in the quarter and GM is generating more of its own batteries, he said. The company is on track to achieve a single-digit average profit margin on electric cars next year.
Chief Executive Mary Barra, in a letter to shareholders, said GM is seeing “good initial sales momentum” for cars like the Cadillac LYRIQ, an electric SUV. The company also benefited from a significant drop in battery cell charging and commodity prices. she added.
GM’s battery module production has increased 300% in the past six months. Barra says the company plans to double its existing capacity by the end of the summer.
“The improved availability of modules allows for increased vehicle production, which will help us win even more new consumers in the developing U. S. EV market. “”We are not going to be able to do anything about the U. S
Jacobson noted on GM’s conference call that the price adjustment of its 2024 Blazer EV has been well-received by both dealers and consumers.
During the quarter, the company earned $3. 84 billion before taxes in North America, but lost $10 million in its overseas operations and a loss of $106 million in China.
Barra said there have been demanding situations with China in recent years, adding the COVID-19 pandemic and the chain’s problems, but GM remains committed to the country for the long term.
“This is a market that will experience a really significant expansion in the medium term,” he added.
The automaker’s Cruise autonomous vehicle unit has lost $519 million before taxes as it tries to recover from a serious crash and cover-up allegations in California. Barra said Cruise, who had suspended testing and robotaxi rides after wasting his California license, had resumed testing in Phoenix will update maps and collect traffic information.
Jacobson’s full-year spending on Cruise is expected to be about $1. 7 billion.
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Michelle Chapman in New York contributed to this report.