General Motors’ first-quarter net profit rose 19% over the prior year thanks to strong U.S. sales. The firm increased its profit forecast for the entire year in anticipation of continued strong demand for its vehicles.
The Detroit manufacturer increased its revenue from January through March from $1.99 billion to $2.37 billion.
GM earned $2.21 per share, easily surpassing analyst projections of $1.72, after deducting a $900 million charge to pay severance packages to around 5,000 white-collar employees who took buyouts during the quarter.
The quarter’s revenue came in just shy of $40 billion, exceeding expectations of $38.55 billion and increasing by 11% from a year earlier.
Due to the year’s promising start, the business increased its pretax profit projection for 2023 to $11 billion to $13 billion. It used to range between $10.5 billion to $12.5 billion.
General Motors Co. shares increased 2.3% before Tuesday’s market opened.
Paul Jacobson, the chief financial officer, did not expect a recession this year but predicted solid demand through December.
April is still perfect for us, he remarked. Therefore, we are optimistic that we can meet this more excellent instruction.
The buyouts are already paying off for GM, and according to Jacobson, a predicted $1 billion in yearly savings will also benefit the business this year.
Prices held up well despite a slight decline in GM’s average transaction price as sales in the United States, the company’s most lucrative market, increased by about 18% in the quarter.
In the United States, the average cost of a GM vehicle was $50,263, which is $490 less than a year earlier.
“We will have a little bit of a challenge as we lap last year’s pricing increases through this year,” Jacobson said, adding that the new models GM is launching should assist with pricing and demand.
He claimed he doesn’t see any justification for GM to matching the numerous price reductions for electric vehicles announced by industry leader Tesla this year.
He added that the consumer demand for our products appears to be very high, and we feel pleased about our current pricing.
GM anticipates a significant rise in sales this year due to the introduction of several new electric vehicle models.
The business plans to produce 400,000 EVs in North America between 2022 and the first half of 2024. GM sold 20,670 electric vehicles in the first quarter, which was still enough to move it into second place behind Tesla.
Also on Tuesday, GM and Samsung SDI of South Korea announced plans to invest more than $3 billion in a new battery cell manufacturing facility in the United States.
The exact location is uncertain, but the businesses intend to start doing business there in 2026.
The factory, which is anticipated to produce prismatic and cylindrical nickel-rich cells, will be run jointly by GM and Samsung SDI.
The auto sector was compelled to reduce production last year due to a global shortage of computer chips and other parts, which led to price increases as demand remained high.
But manufacturing and the lack of features are beginning to improve. At the end of March, GM had 412,000 vehicles in stock, an increase of 50% over the same period last year.
For the quarter, GM’s pretax profits in North America increased 14% to $3.58 billion. However, its revenue from China dropped by 64% to $83 million.
According to Jacobson, new gasoline and electric vehicles from the corporation are on the way as Chinese sales rebound.