General Motors reported better-than-expected gains in its third-quarter results on Tuesday, prompting an upward adjustment in the midpoint of its earnings guidance for 2024. Revenue for the three months ending September 30 climbed to $48.76 billion, a significant increase from $44.13 billion in the same period last year, and exceeding the analyst estimate of $44.38 billion according to Capital IQ.
Adjusted earnings per share rose to $2.96, up from $2.28, beating the Street's expectation of $2.43. As a result, GM's shares shot up by 8.5% during Tuesday's trading session. In a letter to shareholders, Chief Executive Mary Barra highlighted GM's achievements in growing its US retail market share through strategic pricing, well-managed inventory, and reduced incentives.
The market share in North America experienced a slight increase of 10 basis points to 15.9%, whereas globally, it dipped to 6.7%, down from 7.3%. Chief Financial Officer Paul Jacobson shared insights during a conference call with analysts, noting that GM's internal combustion engine vehicles maintained robust pricing relative to the industry.
He remarked, "Our highly profitable full-size pickups and full-size sports utility vehicles continue to gain market share in their respective segments." The decision to pull forward some SUV production in anticipation of upcoming model launches significantly contributed to boosting earnings before interest and taxes for the third quarter. In China, GM, along with its joint ventures, saw a sequential growth in sales of 14%, marking its strongest performance since the third quarter of 2022.
Barra indicated, "Our growing portfolio of electric vehicles and plug-in hybrids played a key role. In fact, our new energy vehicles outsold internal combustion engine models for the first time." Looking ahead, the automaker revised its full-year adjusted earnings per share expectation to the $10 to $10.50 range, lifting the previous lower end from $9.50.
Analysts anticipate a normalized EPS of $10.17 for the ongoing year. Additionally, GM increased its target for automotive free cash flow, now projected to be between $12.5 billion and $13.5 billion, up from the prior expected range of $9.5 billion to $11.5 billion. The company is well-positioned to produce and wholesale approximately 200,000 EVs in North America this year and aims to achieve "variable profit positive" status in the fourth quarter, according to Barra. Barra emphasized the urgency of making the company’s EVs profitable on an earnings before interest and taxes basis in a timely manner, stating, "The company's total share of the EV market is approaching 10%.".