General Motors (GM) reported third-quarter earnings that surpassed Wall Street expectations, driven by a pricing strategy that offset declines in its Chinese division. This marks the third update to GM’s financial outlook for the year, as the company continues to perform well, primarily thanks to its North American operations.

What can you tell us about GM’s revised forecasts for 2024?

GM now anticipates adjusted earnings before interest and taxes for the year to range between $14 billion to $15 billion, or $10 to $10.50 per share, an increase from the previous forecast of $13 billion to $15 billion and $9.50 to $10.50 per share. Additionally, GM raised its forecast for adjusted automotive free cash flow from $9.5 billion to $11.5 billion, now estimating it will be between $12.5 billion to $13.5 billion.

How do you view the impact of these adjustments on shareholder returns?

The company is narrowing its net income guidance attributable to common shareholders, excluding dividends, to between $10.4 billion to $11.1 billion, or $9.14 to $9.63 per share, up from the previous guidance of $10 billion to $11.4 billion, or $8.93 to $9.93 per share.

Can you elaborate on the factors influencing GM’s robust third-quarter performance?

GM’s strong third-quarter results were aided by effective pricing strategies that mitigated losses in China, despite labor costs increasing by $200 million compared to last year and warranty costs rising by $700 million. Paul Jacobson, GM’s Chief Financial Officer, noted that during the July to September period, the average transaction price for each vehicle remained above $49,000, a figure that Wall Street has been closely monitoring for signs of weakness.

What feedback have you received from consumers?

Jacobson mentioned in a media briefing, “Consumers are very supportive of us,” adding that the situation has remained consistent compared to previous quarters.

Turning to financial performance, how did GM’s revenue and net income fare this quarter?

GM’s revenue grew by 10.5% year-over-year to $48.76 billion, compared to approximately $44 billion last year. Net income saw a slight increase to $3 billion, with adjusted earnings per share of $2.96, exceeding expectations of $2.43.

What role did production strategy play in these results?

Jacobson indicated that the company’s excellent performance for the third quarter was partially due to the early production of certain fourth-quarter trucks, contributing an additional $400 million to adjusted earnings.

Can you discuss the performance of GM’s North American versus international operations?

The bulk of GM’s profits continues to come from its North American segment, which reported adjusted earnings before interest and taxes nearing $4 billion, marking a 12.9% year-over-year increase, with an adjusted profit margin of 9.7%. In contrast, the Chinese division reported a loss of $137 million, while adjusted earnings from other international markets declined sharply by 88.2% to $42 million.

Finally, how has the financing side of the business performed?

GM’s financing division saw adjusted earnings fall by 7.3% to $687 million in the third quarter.