General Motors has good news and bad news about their profits. The good news is that revenues are up over the past three months, but profits are down by 14% compared to last year’s sales numbers. The third quarter net revenue was about a billion dollars more than this time last year, showing a total of $37.6 billion, but the net income was only $1.5 billion, which is down $1.7 billion from last year. This is the opposite of what both Ford and Chrysler have reported about their third quarter incomes, they have both increased significantly.
Part of General Motors decreased profit is because the European market is hitting them hard, to the tune of about $292 million of losses shown in 2011 and a giant $478 million in losses shown for the third quarter of this year. Overall General Motors shows European market losses of $17 billion since 1999. Another reason is because they have ramped up production of small cars. Cars like the Chevy Sonic and Chevy Spark are selling like hotcakes on Sunday morning, but these small cars have a minimal profit margin compared to the luxury class or SUV models. This does of course help General Motors South American markets, but the loss is there for this quarter.
A glimmer of hope in all of this is that General Motor’s pension liability has dropped by around $29 billion because a high percentage of salaried employees have opted for a lump sum payment. These payments were quite a bit higher than what was expected because more employees usually choose to keep their pensions, but not so in this case.
Chairman and CEO Dan Akerson seems confident that General Motors is going to continue onward and upward despite the 14% decrease. He comments, “GM had a solid quarter because customers around the world love our new vehicles and we’re also seeing green shoots take hold on tough issues like complexity reduction, pensions and Europe. We are going to keep playing offense with growth products like the Chevrolet Onix, Opel Mokka and Cadillac ATS and continue to systematically address business risks.”
Source Automotive News