GM said strong results in North America helped offset weakness in China to lift its net profit during the October-to-December period to $2 billion, from $1.7 billion a year earlier. One-time losses from an exit of some Russian operations and payments to buy out some U.S. Buick dealerships cut more than $1 billion from the bottom line.
The Detroit auto maker posted pretax profit, excluding one-time items, of $3.8 billion, or $2.12 per share, higher than average analysts’ estimate of $1.69, according to FactSet. Shares rose more than 5% in premarket trading.
For the year, GM posted pretax profit of $14.5 billion, at the high end of a range it forecast in November.
Revenue rose 28%, to $43.1 billion, as GM shook off a shortage of semiconductors and other supply-chain problems that have bogged down factory schedules for more than two years. GM’s vehicle output in North America jumped 37% in the fourth quarter from a year earlier, according to research firm Wards Intelligence.
For 2023, GM said it expects pretax profit to total between $10.5 billion and $12.5 billion, or $6 to $7 per share, above the average analysts’ forecast of $5.78 per share, according to FactSet.
Also Tuesday, GM said it plans to develop a lithium mine in Nevada, which the auto maker described as the largest known source of lithium in the U.S. GM said it would partner on the site with
Lithium Americas Corp.
and make a $650 million equity investment in the mining company, with plans to use lithium carbonate from the location in GM’s electric-vehicle batteries.
Investors are closely watching the resilience of GM’s pricing power. Like other car companies, GM has commanded strong prices for the past two years, with buyers paying top dollar as tight vehicle supplies created a seller’s market. The company curbed output of less-profitable models in favor of its biggest moneymakers, pickup trucks and large SUVs.
Wall Street analysts and auto executives generally predict buyers will pull back on what they are willing to pay this year. The question is by how much and how fast.
GM executives have said they are confident a solid backlog of prospective buyers will remain intact despite rising interest rates, falling used-car prices and other factors that could keep car buyers away.
“We’re still seeing strong demand for our vehicles,” GM Chief Executive
Mary Barra
said during an appearance in Detroit in December, adding that the company is mindful of the tougher environment for car buyers. “We’re all in uncharted territory.”
The average price paid for a GM vehicle in the fourth quarter was $51,770, down about $2,000 from a year earlier but still high by historical standards.
Some analysts say Tesla’s deep price cut earlier in January—followed Monday by Ford’s reduction on its main EV—could add downward pressure to the industry’s pricing power, which was already expected to weaken as inventories are rebuilt and interest rates pinch consumer budgets.
Tesla
‘s price cuts “could help catalyze and accelerate what may have otherwise been a more modest or protracted pricing normalization,” JP Morgan analyst
Ryan Brinkman
wrote in an investor note last week.
Write to Mike Colias at [email protected]
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