(News Bulletin 247) – The Detroit automaker once again published results above expectations in the third quarter and raised its forecasts. Which allows its action to jump on Wall Street and gain more than 45% since the start of the year.

The automobile industry has been suffering on the stock market since the start of the year. Particularly in Europe, where BMW, Mercedes-Benz, Volkswagen, Aston Martin and Stellantis (which admittedly has a very American coloring) all issued a heavy profit warning last month.

Going against this trend, General Motors demonstrated its good form a little more this Tuesday. The owner of the Chevrolet, Buick and Cadillac brands posted revenue of $48.8 billion in the third quarter, significantly above the LSEG consensus cited by CNBC at $44.59 billion. Earnings per share, a closely watched indicator on Wall Street, stood at $2.96 versus $2.43 expected by consensus and $2.28 a year earlier.

“In the third quarter, we increased our share of the U.S. retail market with above-average pricing, well-managed inventory and below-average discounts,” Chief Executive Officer Mary Barra said in a statement. letter to shareholders.

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Prices that resist

While Stellantis and Ford face large inventories in the United States, forcing them to take measures to sell old models, such as price cuts, General Motors is in a healthier position. At the end of September, inventories in equivalent number of days of sales stood at 91 days for Ford, 90 days for Stellantis but only 68 days for General Motors, according to data cited by Royal Bank of Canada.

This allows the company to defend its average sales prices. During a conference call with reporters, Chief Financial Officer Paul Jacobson said the group’s average transaction price remained above $49,000 in the third quarter.

“The consumer has held up remarkably well,” he said, as quoted by CNBC. “Nothing has changed from what we have experienced in recent quarters,” he added.

Thanks to this good price discipline combined with controlled costs, operating profit increased from $3.6 billion in the third quarter of 2023 to $4.1 billion (compared to a consensus of $3.3 billion according to Wedbush ) and the adjusted operating margin stood at 8.4%, up 30 basis points (0.3 percentage points) year-on-year.

Volumes and prices (driven by mid-size SUVs) had a positive impact of 900 million and 1 billion dollars respectively, while the mix, on the contrary, had a negative effect of 600 million dollars on the result operational. This latter impact is explained by the rise in sales of electric vehicles which have negative margins.

Automotive adjusted free cash flow stood at $5.8 billion versus $4.9 billion a year earlier.

“Fierce competition”

At the end of this quarter, the company raised several targets for 2024. Automotive operating income is expected between $14 billion and $15 billion, compared to $13 billion to $15 billion previously, adjusted cash flow automotive industry between $12.5 billion and $13.5 billion versus $9.5 billion to $11.5 billion previously, and adjusted earnings per share between $10 and $10.5 versus $9.5 billion at 10.5 dollars previously. The company thus raised its outlook for the third time in a row.

On Wall Street, the stock jumped 8% around 5:15 p.m., bringing the stock’s progression over the whole of 2024 to 46.8%. General Motors thus completely eclipses Ford (-9.6% in 2024), Tesla (-13%) and Stellantis (-44%).

“General Motors reported spectacular results for the quarter to the end of September (…) which far exceeded investors’ expectations in terms of revenue and net income, as the company continued to realize significant profits from its investments and of his rise in power on the ground”, judges Dan Ives of Wedbush. The analyst believes that the group is taking “a step in the right direction” showing that it is managing to navigate “stormy” waters.

“I want to make it clear that we do not confuse progress with victory. Competition is fierce and the regulatory environment will continue to get tougher. This is why we are focused on optimizing the margins of our internal combustion engine vehicles and we strive to make our electric vehicles profitable on an operating profit basis as quickly as possible,” said Mary Barra in the letter to shareholders.