What’s going on here?
General Motors (GM), the biggest US car company, announced third-quarter results that beat investors’ expectations and revved up its share price on Tuesday.
What does this mean?
Both GM’s revenue and profit came in ahead of expectations, leading it to hike its profit and cash flow forecast for the year. And while GM was characteristically quiet on giving too much away about next year’s expectations, it did offer a few clues. Overall, despite bracing for a tougher year, the car giant’s planning for profitability in 2025 to be about the same as in 2024. That’ll be down to GM being more efficient in producing SUVs and EVs (GM makes on loss on each electric vehicle it sells right now), being more disciplined on its spending in general, and turning around its China business which has lost almost $350 million this year.
Why should I care?
For markets: Driving investor confidence.
GM has exceeded analysts’ revenue forecasts for the last eight quarters, and beaten their revenue predictions for the last nine. It’s little wonder, then, that the carmaker’s stock has risen almost 40% this year, while shares of rivals Ford, Tesla, and Stellantis are down 11%, 12%, and 45% respectively. GM’s seemingly been able to do what others can’t: guzzling profit from its gas-guzzlers while still betting on an electric future, keeping investors optimistic about its adaptability and growth.
The bigger picture: GM’s doing what Tesla can’t.
Last quarter, GM’s average price per vehicle sold was over $49,000. That compares to Tesla’s roughly $45,000 average selling price, which has been coming down pretty rapidly as the EV wunderkind battles against tough competition. GM, meanwhile, has actually been able to increase prices, reduce discounts and incentives, and gain market share in the last few months – and that car buyers, as far as it’s concerned, have held up “remarkably well”. An enviable combination if ever carmakers saw one…
