GM Reports a Profit of $2.5 Billion During the Third Quarter
Even as sales slid for each of GM's major brands, the automaker saw an increase in its overall profitability
During the third quarter of 2018, each of GM’s major automotive brands experienced significant sales declines. However, sales volume is just one measure of a company’s success.
Indeed, GM reported a profit of $2.5 billion during the third quarter.
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That profit gain stands in stark contrast to GM’s financial health during the third quarter of 2017. GM lost a total of $2.9 billion during that financial quarter, due in part to the faltering sales of Opel and Vauxhall, which GM still owned at the time.
In a year’s time, GM has been able to completely reverse that financial trend. This change in fortune was caused by GM’s focus on increasing profit per transaction.
As a result, the average transaction price paid for a new GM model reached a new record during the third quarter. Customers are paying an average of $36,000 for a new GM model. That’s $800 more than they paid for a new GM vehicle a year ago and $4,000 more than the industry average.
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The arrival of the brand-new Chevrolet Silverado and GMC Sierra pickup trucks helped fuel this ever-growing average transaction price. These vehicles also generate more of a profit for GM than its passenger cars do.
In the U.S. alone, GM generated $2.8 billion from its sales. Internationally, GM’s profits settled somewhere around $100 million, with losses in South America offset by gains of $500 million in China.
GM’s profit gains were also beneficial for its standing on Wall Street. GM’s stock price rose 9 percent to $36.59 a share after the announcement of its third quarter financial earnings.
“Our third-quarter performance demonstrates our determination to manage risks and deliver strong business results while continuing to advance the future of mobility,” GM CEO Mary Barra said in an official statement
Though sales may be sliding for each of GM’s brands, customers are paying more for the vehicles they purchase, which means more of a profit for GM. That’s an outcome that the automaker is surely satisfied with.
News Source: The Detroit News