Fritz Henderson, CEO of General Motors (Getty Images)General Motors (GM) on Wednesday reported a third-quarter profit that exceeded analyst expectations by a wide margin.

GM's profit of $1.5 billion, or $0.89 a share, was less than the $1.7 billion it earned in the third quarter of last year. But it was well ahead of estimates by Wall Street analysts, who predicted that GM would earn about $0.60 a share for the quarter, according to a Bloomberg survey.

GM's earnings were hurt by ongoing losses in Europe. But elsewhere, its business is showing good signs.

Signs of Improvement for GM in the U.S.

GM's pre-tax earnings in its North American region, which includes the U.S., were $1.8 billion. That's down from last year's $2.2 billion, but despite the drop, it actually represents some improvements in GM's operations.

Ironically, GM's profits in the U.S. suffered a bit because of the popularity of some of its new models. The Chevrolet Sonic and Buick Verano have both been strong sellers for GM. But because they're both small cars, they're less profitable for the company than its big pickup trucks.

GM's Trucks are Getting Stale

GM's trucks haven't been selling badly. But they're near the end of their life cycles, with all-new models due next spring. That means GM has been losing some sales to Ford (F) and Chrysler, both of which have more up-to-date products. That's just the way the cyclical car business works.

But there are good signs for GM, too. Sales are up (which helped profits) and better pricing -- the ability to sell its cars and trucks with fewer discounts -- contributed about $300 million to GM's bottom line, CFO Dan Ammann told reporters on Wednesday.

GM has a bunch of new products due to come to U.S. dealers over the next couple of years. The fact that pricing is already improving is a good sign for future success in the company's most important market.

Bumpy Roads Overseas

Meanwhile, GM's overseas results were mixed. While profits were up in Asia and South America, thanks to new products and improvements to operations, GM's troubled European branch posted a $478 million loss.

GM's German subsidiary, Opel, has lost more than $15 billion since 1999. Like most European automakers, it has deep problems similar to the ones that drove GM into bankruptcy: too many factories, too much bureaucracy, and too-expensive contracts with powerful labor unions.

Ford recently announced a grand plan to fix its European operation, and analysts have pressured GM to take a similar step. But GM said on Wednesday that the changes it has already made are starting to bear fruit, and predicted that it, like Ford, would begin to break even in Europe in a couple of years.

For GM's long-suffering shareholders, that would be a welcome change.

At the time of publication, Motley Fool contributor John Rosevear (@jrosevear) owned shares of Ford and General Motors. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of General Motors and Ford.

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Yeah, no wonder GM is showing a profit.... they systematically decreased pay for thousands this month within their dealerships. My husband took a huge (about $200-300 a week) pay cut this month because of restructuring of commission pay plans within the company. And this was not pay cuts to salary employees making $250,000 or more. This was pay cuts to skilled technicians making $65,000 or less a year on commission. This means his pay just got decreased to about $55,000 a year for our family of 5. Obama did nothing for our household.

November 09 2012 at 7:57 AM Report abuse rate up rate down Reply

wow try to add a comment and apparently I'm being sensored for telling the truth

November 09 2012 at 7:56 AM Report abuse rate up rate down Reply
Ashley Kinder


November 01 2012 at 11:59 AM Report abuse rate up rate down Reply
John Baldwin

Just ask any of the GM share and bond holders who took it n the shorts!

November 01 2012 at 11:05 AM Report abuse rate up rate down Reply

This is NOT TRUE. Nothing is improving for this auto company. I work for GM and I can tell you this article as well as all the touting by our President about how GM is climbing out of it's slump is purely political and complete nonsense. Automobiles are not moving for this company. Everyone complains about jobs going oversees, etc. yet those same people are driving Toyota and telling us all it is because they make a better product. My question is, when is the last time you purchased from an American dealer?

November 01 2012 at 10:29 AM Report abuse rate up rate down Reply

We are a great country to creat jobs, but they are in China. We have no where to look but ourselves for buying such products. Let us put all Americans back to work and buy American products. Now you complain about our debt, but you have a foreign car in your garage, foreign clothes in your closet and foreign tools in your garage. Wake up America, buy American........

November 01 2012 at 10:15 AM Report abuse rate up rate down Reply

GM is becoming a foreign company. One in five GM vehicles are actually produced in the US. GM has aligned itself with the Chinese Communist about it. 70% of GM's car sales are outside of US.

November 01 2012 at 9:53 AM Report abuse rate up rate down Reply

GM earnings down 14%. Hmmm! don't understand the reason for this article making it sound like all is well with GM. Most importantly, the stock has gone nowhere. It needs to reach around $50 bucks a share before we, taxpayers, have any hope of getting our money back. Good luck, since most of GM sales increase was due to government purchases. This can't continue and ford and other auto companies are kicking their butt.

November 01 2012 at 9:48 AM Report abuse rate up rate down Reply

Big Whoop. Government Motors (or maybe it should be US Taxpayers Motors?) is cheering over this paltry "profit"? Do the Math: They got $45 BILLION in FREE money from the US taxpayers in exchange for some worthless, freshly printed stock certificates which the Government can't sell. Then the kangaroo bankruptcy court let them erase ALL of their $45 BILLION in debts that they owed to bondholders, stockholders, suppliers, vendors, dealerships, retirees, and employees. Then the were given a FREE PASS by Uncle Sap to NOT PAY and Federal Income Taxes until they felt like it. Then, the were given another FREE PASS NOT to FUND the retiree Pension Plans, which is illegal for every other company in America. They're about $20 BILLION behind in these payments. And they're BRAGGING about this silly little profit? ANYONE could make a company profitable with these gimmees. So we've burned through around $100 BILLION to save 100,000 jobs. What a deal!

November 01 2012 at 9:47 AM Report abuse rate up rate down Reply

I love this, GM profits are down 14% but that's good news because apparently the analysts were expecting it to be worse. So let me make sure I understand this, if I call my insurance company and buy a policy that covers my house for a $250,000.00 loss and there is a fire and it only costs $200,000.00 to repair that's good news? OK, sold me.

November 01 2012 at 9:32 AM Report abuse rate up rate down Reply