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General Motors beat market expectations by announcing much stronger than expected first quarter earnings on the back of higher earnings in the core US market where new car sales are expected to decline this year for the first time since the Great Recession.
GM announced adjusted earnings per share of $1.70, up 35 per cent from the year earlier period and well above market expectations of $1.47.
North American revenue was up 10.7 per cent to $29.3bn and North American EBIT-adjusted earnings were up 48.8 per cent to $3.4bn.
The Detroit automaker’s strong earnings contrasted with rival Ford’s results on Thursday, with the car-maker announcing first-quarter earnings sharply down on the year. Ford’s pre-tax profits declined to $1.5bn-$2bn in its automotive segment, in results that underlined investor concerns about a cyclical downturn in the US auto industry.
GM chief financial officer Chuck Stevens said earnings “continue to be led by strength in North America and China,” areas where Ford reported weakness in the first quarter.
Ford’s US sales fell 5 per cent to 771,000 vehicles, although global profits were also hit by a host of other factors including higher warranty costs, recall costs, unfavourable exchange rates, higher commodity costs and investments in new technologies, the company said.
Ford chief executive Mark Fields said: “We continue to expect the US to decline slightly this year but remain at a historically high level.”
Most US auto market analysts expect auto sales to fall year on year in April, resulting in an estimated seasonally adjusted annual rate of just over 17m vehicles for the full year, well down on 2016’s record 17.55m. Kelley Blue Book said it sees “a greater likelihood that 2017 will be the first down year since 2009”.
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