4 Reasons GM Is Screwing It Up While Automakers Struggle

• General Motors reported third-quarter profit that beat estimates.
• GM's profits were driven by strong SUV sales, electric vehicle growth, cost cuts and improving sales in China.
• GM's electric vehicles hold a 9.8% share of the U.S. electric vehicle market, trailing only Tesla.

General Motors reported strong third-quarter 2024 earnings on Tuesday, beating Wall Street estimates and helping shares rise more than 9%.

Executives attributed the financial outperformance – amid a difficult year for Detroit in which demand for electric vehicles stagnated and auto prices remained frustratingly high for consumers – to booming truck and SUV sales, improving EV profitability, cost reductions and the strength of the Chinese market back.

Truck and SUV profits underpin GM's profits

GM previously reported a slight decline in vehicle deliveries, roughly in line with the industry decline in the three months ended Sept. 30.

However, the average price remained high at $49,349, buoyed by GM's lineup of full-size pickups and SUVs and fewer incentive offers than the competition.

GM has launched more than a half-dozen new gasoline-powered SUV models this year, including compacts like the Chevrolet Equinox and three-row family haulers like the Chevrolet Traverse and GMC Acadia. Consumers paid an average of $6,000 more for new cars than for the models they replaced, GM CEO Mary Barra said on a conference call with investors.

Electric vehicles are still not profitable, but they are getting there

While rivals lament slowing growth in the electric vehicle market, GM executives tout their investments in the segment as a strength — even as the company suffers the same market volatility as rivals.

General Motors sold more than 32,000 electric vehicles in the last three months, up 60% year over year. Of those who have purchased a GM electric vehicle, more than 60% were purchases from other automakers, Barra said.

The company now claims a 9.8% share of the US market, second only to Tesla.

But electric vehicles are still not profitable. That turning point is expected to be reached this quarter, Barra said at GM's most recent investor day in early October.

GM is working to transform China

GM's China business just enjoyed its best quarter since the same period in 2022, with sales up 14% from the second quarter of this year.

Despite the revenue growth, the company's China operations still lost $137 million in the third quarter.

The Chinese market, GM's largest and once most consistent profit center in the world, weighed on the company's finances last year due to increasing competition.

GM has been working to adjust its product mix in China to offer more electric vehicles and plug-in hybrids.

Barra praised the success of Buick's GL8 plug-in hybrid luxury minivan, which was launched in April, as a new model that drives progress in China.

Reduce costs through simplicity

GM expects to end 2024 with $2 billion less in fixed costs than two years ago, Barra said at investor day.

One key opportunity is to simplify the number of options and features offered on vehicles, which can be overwhelming for buyers.

“It's about making our customers' lives easier while reducing the cost of the system,” GM President Mark Reuss said at the event.

Reuss said GM has removed 2,700 items, from seat assemblies to wiring harnesses, from its inventory. On average, the company has seen a 10% decrease in the total number of parts per vehicle.