New York
CNN
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General Motors reported much stronger-than-expected third-quarter earnings and provided guidance that puts the company on track for record profits in 2024 – just a year after a costly strike by members of the United Auto Workers union.

The company reported it had an adjusted profit of $3.4 billion in the third quarter, compared with $3.2 billion in the same period last year, which was impacted by the first two weeks of the strike, which lasted more than six weeks. Adjusted profit for the first nine months of the year was $9.9 billion.

Sales rose more than 10% to $48.8 billion, exceeding expectations by nearly $800 million and rising much faster than the 5% increase in the number of vehicles sold. That means GM is selling cars at higher average prices this year than in 2023. The average transaction price in North America was almost $50,000.

GM estimated last year that the strike cost the country $1.1 billion. The company had argued during the strike that it could not meet union wage demands and remain competitive with non-union automakers, but ultimately agreed to give workers an immediate 11% raise, plus additional raises that will increase wages by at least another 14 percentage points compared to previous years. next four years.

During the strike, the UAW’s slogan on the picket lines was that record profits should result in a recording contract. The deal included the largest wage increases ever won by the union at GM.

Nevertheless, GM on Tuesday raised its profit expectations for the rest of the year. The new guidance suggests full-year profits will now surpass 2022’s record profits.

The strong results and expectations sent shares of GM (GM) up 2% in premarket trading. Shares are already up 37% this year through Monday’s close.

GM CFO Paul Jacobson told reporters on Monday that GM had cut costs in the run-up to the strike in anticipation of raises for unionized workers.

“We’ve been able to look at that as the cost of doing business,” he said. “No regrets about the UAW contract.”

Jacobson praised the GM team for raising its earnings target, noting that the company was able to “overcome inflationary pressures.”

If General Motors is having trouble, it is with its non-union operations in China, where it lost $137 million in the quarter, compared with the $192 million profit it made there a year earlier.

The number of vehicles sold in China in the quarter fell 37% to 372,000 due to increased competition from Chinese automakers and what GM called “challenging market conditions.”

China was once GM’s largest market for cars, but third-quarter sales now represent just over half of U.S. sales volume.