General Motors Profit Nearly Doubles on Higher Vehicle Prices

After years of big discounts, GM (GM) is finally getting a good price for its cars and trucks, and it's helping the company's bottom line.

General Motors Co. surprised Wall Street Thursday by doubling its second-quarter profit. A big reason was higher prices for its vehicles worldwide.

GM's net income totaled $2.5 billion, or $1.54 per share. That compared with $1.3 billion, or 85 cents per share, in the same quarter a year earlier.

Chief Financial Officer Dan Ammann said GM gained $1 billion from higher prices for its cars and trucks. GM was able to pull back on rebates and other deals in the second quarter because of severe earthquake-related shortages at Toyota Motor Corp., Honda Motor Co. and other competitors. The company also has raised prices to compensate for the higher cost of raw materials such as steel, although Ammann said raw material costs abated somewhat in the second quarter. Popular products like the Chevrolet Equinox and GMC Terrain also didn't need incentives to sell in big numbers.

It was GM's third straight quarterly profit since its initial public offering of stock in November, and its sixth straight overall.

Revenue rose 19 percent to $39.4 billion, while sales rose 7 percent to 2.3 million cars and trucks. Although sales softened somewhat in the U.S. and Europe because of buyers' worries about the economy, GM gained market share in every region outside South America.

It won more customers in the U.S. thanks to the new Chevrolet Cruze small car, which was the best-selling car in America in June. The Cruze also sold well in China, where Chevrolet's June sales rose 34 percent.

"GM's investments in fuel economy, design and quality are paying off around the world," GM Chairman and CEO Dan Akerson said in a statement.

GM blew past Wall Street's estimates. Analysts polled by FactSet forecast earnings of $1.18 per share on revenue of $36.56 billion.

The company's stock rose 58 cents, or 2.1 percent, to $27.75 in pre-market trade.

GM's shares have been trading nearly 20 percent below the offering price of $33 in November. They peaked at $39.48 in January but fell to a low of $27.05 on Tuesday. Investors are concerned about the strength of the economic recovery and the health of a company that is just two years out of bankruptcy protection. GM reported its biggest profit in more than a decade in the first quarter, but its stock fell as investors noted that nearly half the profit was from the sale of GM's stake in an auto parts company.

GM's results are being closely watched by the U.S. government, which still holds 500 million GM shares that it got as part of the company's 2009 bailout package. The government needs $26.4 billion to recoup its full investment in GM, meaning GM's shares would have to sell for roughly $53 per share.

The Treasury Department said in May that it would wait until this month, at the earliest, to sell more GM shares. But it could also decide to wait until after GM completes its latest contract talks with the United Auto Workers union. The UAW contract expires Sept. 14.

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ieyun313

When you buy from the charity, I paid them anyway, but something that you think or say what a good price if the quality is fine magnetic silver zinger? What are you looking for when buying magnetic silver zinger?
Cheers:
http://magnetic-silver-zinger.blogspot.com/

August 26 2011 at 2:18 AM Report abuse rate up rate down Reply
ieyun313

When you buy from the charity, I paid them anyway, but something that you think or say what a good price if the quality is fine magnetic silver zinger? What are you looking for when buying magnetic silver zinger?
Cheers:
http://magnetic-silver-zinger.blogspot.com/

August 26 2011 at 2:17 AM Report abuse rate up rate down Reply
huffmans05

Well heck, lets all go help the Japs, Koreans, Swedes, and any other people that HATE us, by buying THEIR cars. Forget your neighbors, fellow Americans and the SUPPLIER jobs that depend on an American Co.

August 04 2011 at 12:52 PM Report abuse -1 rate up rate down Reply
1 reply to huffmans05's comment
maa2626

many people distrust the feds, the feds own the company, people dislike/distrst the feds. one of the first items of business when chrysler was taken over by the feds was to cancel 7/70 warrantys and turn them into 3/36 warrantys. enough said

August 04 2011 at 1:01 PM Report abuse +1 rate up rate down Reply
totyba

Amazing what can get in to the "news"- Wonder if one writes about aliens landing in Detroit would also be classified as "news"? Who knows maybe they (aliens) are buying all those GM vehicles.
This article is a total BS lie-

August 04 2011 at 12:37 PM Report abuse +1 rate up rate down Reply
luckee8s

DONT BUY ANY GM VEHICLES NEW OR USED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
ITS THE ONLY WAY WE THE US TAXPAYER CAN MAKE A DIFFERENCE

August 04 2011 at 11:30 AM Report abuse +1 rate up rate down Reply
maa2626

lets review- gm is owned by the feds, was bailed out with tax money, some of the money was paid back (remember the ad that was on for less than a week), stockholders and suppliers were stiffed, unions were made whole, the feds passed our new budget, the feds embrace zero based budgeting, 850$ in stimulating money needs to be spent, it is the birthday of the current inhabitant of the white house, lets all celebrate, 14plus trillion in debt,and GM is making money. no way this article is to be trusted. and the volt? it makes sense for the government car company to produce a car for the masses, most sales have been to GE, go figure. and for those of you that want to debate bailout tax money has been paid back, I need to see the check/transfer/accounting proof.

August 04 2011 at 11:10 AM Report abuse +3 rate up rate down Reply
marine1942

GM stock today hit new low for year. Writers best come up with more positive news for Obama's investment

August 04 2011 at 11:06 AM Report abuse +4 rate up rate down Reply
luckee8s

GOVERNMENT MOTORS A ONE MONTH SUCCESS!!!!!!!!!!
WE THE US TAXPAYERS STILL OWN WORTHLESS STOCK
WHY DONT THEY BUY OUR STOCK BACK WITH THESE PROFITS
NO THE US TREASURY WILL LOSE OUR MONEY JUST LIKE THEY DID WITH
SELLING CHRYSLER TO FIAT LOSING 1.3 BILLION FOR US
WE MUST STOP THIS ANY WAY YOU CAN !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

August 04 2011 at 11:04 AM Report abuse +3 rate up rate down Reply
mastercraftmyers

Next month the new Heading will be GM losses money and needs another bailout.

August 04 2011 at 9:51 AM Report abuse +4 rate up rate down Reply
marine1942

GM sold 150 of highly touted Chevy Volts in June. Another Obama failure

August 04 2011 at 9:00 AM Report abuse +4 rate up rate down Reply