DETROIT – Despite a small dip in U.S. vehicle sales, General Motors' first-quarter net income rose more than 25% on strong deliveries of pickup trucks and other higher-profit vehicles.
The automaker said that while its average sales price per vehicle was down slightly from last year at just under $50,000, pickup sales remained strong, and it's not seeing the price erosion across its lineup that other companies have experienced.
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GM on Tuesday said it made $2.97 billion from January through March, with revenue increasing 7.6% over the same period a year ago to just over $43 billion. That topped the $41.15 billion that analysts polled by FactSet were calling for.
Excluding one-time items the company made $2.62 per share, easily beating Wall Street estimates of $2.13 per share.
Dan Ives of Wedbush said in a note to clients that GM delivered a solid performance as it concentrates on profitability and managing expenses.
“This was a major ‘prove me’ quarter for GM and shows the long awaited turnaround now appears to be underway for Barra & Co.,” he wrote, referring to CEO Mary Barra.
GM's better-than-forecast prices also allowed the company to raise its full year net income guidance slightly to a range of $10.1 billion to $11.5 billion, up from $9.8 billion to $11.2 billion. Adjusted 2024 earnings per share guidance rose to a range of $9 to $10 from $8.50 to $9.50.
Analysts are looking for earnings of $8.89 per share for the year.
Shares of the company, which is planning to move its Detroit headquarters to a new downtown office building next year, jumped more than 5% in early morning trading.
Chief Financial Officer Paul Jacobson said prices dropped a little because GM sold a higher share of lower-cost vehicles such as the Chevrolet Trax small SUV, which starts at $21,495 including shipping. “The portfolio as a whole has been pretty strong,” he said, noting that pickup truck sales were up 3% in the U.S.
The company still has assumed that prices will drop 2% to 2.5% for the full year, but has not seen the decline yet, Jacobson said.
Retail sales of electric vehicles rose during the quarter, and GM is producing more of its own batteries, he said. The company is on track to hit a mid single-digit profit margin on EVs next year.
CEO Mary Barra, in a letter to shareholders, said that GM is seeing “good early sales momentum” for vehicles like the Cadillac LYRIQ, an electric SUV. The company has also benefited from a significant drop in the cost of battery cells and lower raw material prices, she added.
GM's battery module production is up 300% over the past six months. Barra says the company projects doubling its current capacity by the end of the summer.
“Improving module availability is enabling higher vehicle production, which we believe will help us win even more new customers in the growing U.S. EV market,” she said.
Jacobson noted during GM's conference call that adjusting pricing on its 2024 Blazer EV has been well received by dealers and customers.
During the quarter, the company made $3.84 billion before taxes in North America, but lost $10 million in its international operations, including a $106 million loss in China.
Barra said that there have been challenges with China over the last several years, including the COVID-19 pandemic and supply chain issues, but that GM remains committed to the country long term.
“We believe that it's a market that over the medium term will have substantial growth,” she added.
The automaker's troubled Cruise autonomous vehicle unit lost $519 million pretax as it tries to recover from a serious crash and allegations of a cover-up in California. Barra said Cruise, which had suspended testing and robotaxi rides after losing its California license, returned to testing in Phoenix to update mapping and gather road information.
Jacobson said that full-year expenses for Cruise at anticipated to be around $1.7 billion.
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Michelle Chapman in New York contributed to this report.