4 reasons GM is crushing it right now

• General Motors reported third-quarter earnings that topped estimates.
• GM’s profits were driven by strong SUV sales, EV growth, cost reductions, and improved China sales.
• GM’s EVs hold a 9.8% share of the US EV market, behind only Tesla.

General Motors reported strong third-quarter 2024 profits on Tuesday, topping Wall Street’s estimates and helping send shares surging more than 9%.

Executives attributed the financial outperformance — amid a tough year for Detroit as EV demand stutters and car pricing remains frustratingly high for consumers — to booming truck and SUV sales, improved EV profitability, cost-cutting, and strength in the Chinese market.

Truck and SUV profits underpin GM’s profits

GM previously reported a slight fall in vehicle deliveries, roughly in line with an industry dip in the three months ending September 30.

But average pricing stayed high, at $49,349, buoyed by GM’s lineup of full-size pickups and SUVs and fewer incentive offers than competitors.

GM has launched over half a dozen new gas-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 the models they replaced, GM CEO Mary Barra said on an earnings call with investors.

EVs still aren’t profitable, but getting there

As rivals lament slowing growth in the EV market, GM leaders are touting its investments in the segment as a point of strength — even as it suffers from the same market fluctuations as competitors.

General Motors sold more than 32,000 EVs during the last three months, up 60% over last year. Of those who purchased a GM EV, more than 60% are conquests from other automakers, Barra said.

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

But EVs still aren’t profitable. That inflection point is expected to arrive this quarter, Barra said at GM’s recent investor day earlier in October.

GM is working to turn around China

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

Despite the sales growth, the company’s China operations still lost $137 million during the third quarter.

The Chinese market, the world’s largest and once consistent profit center for GM, has been a drain on its finances over the past year due to increasingly strong competition.

GM has worked to adjust its product mix in China to feature more EVs and plug-in hybrids.

Barra praised the success of Buick’s GL8 plug-in hybrid luxury minivan, which launched in April, as a new model driving improvement in China.

Cutting costs through simplicity

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

One major way is by simplifying the number of options and trims offered on vehicles, which can become overwhelming for shoppers.

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

According to Reuss, GM has eliminated 2,700 unique parts, ranging from seat assemblies to wiring harnesses, from its inventory. On average the company is seeing a 10% reduction in total part numbers per vehicle.