General Motors Corp. today took back its crown from Ford as the nation’s most profitable auto maker, announcing that its third-quarter profits soared 106% to $859.2 million, its best-ever showing and an industry record for the period.
GM cited rebounding North American sales and continued strong performance overseas.
The higher profit, equal to $2.46 a share, was up from $417.9 million, or $1.05 a share, in the same period last year.
The figures were much better than expected. Industry analysts had forecast GM’s performance to be between $1.30 and $1.90 a share.
Regaining Bright Image
The higher earnings helped GM regain some of the luster on its tarnished image. While it has long been the world’s biggest auto maker, it has recently posted poor profit figures, giving Ford Motor Co. the distinction of being the nation’s most profitable auto producer.
Ford said Wednesday that it earned $856 million in the third quarter.
Chrysler Corp. said today that its third-quarter profits fell 54% to $112.5 million as higher costs and production problems offset market share gains for the No. 3 U.S. auto maker.
GM’s report sent its stock sharply higher. It was up 37 1/2 cents at $78 a share when the rest of the market was down sharply. It was trading as low as $76 5/8 a share before the profit figures were released.
GM noted that its third-quarter profit in 1987 was reduced by a one-time charge of $392 million due to changes in depreciation.
GM Chairman Roger Smith and President Robert Stempel said in a statement that the auto maker is seeing strong bottom-line benefits of its efforts to revitalize the company.
GM has seen its share of the market shrink in recent years due to inroads made by Ford and imported vehicles. Smith recently vowed that GM would once again control 40% of the U.S. auto market, but analysts were skeptical about the claim. At present, GM has about 36% of the market, down from its 44.5% market share in 1984.
For the first nine months of the year, GM earned $3.45 billion, or $10.09 a share, up from $2.71 billion or $7.70 a share in the 1987 period. Revenues were $81.37 billion, up from $75.40 billion.
Ford earned $4.14 billion in the first nine months of the year, still outpacing GM.
GM said its cost-cutting efforts have yielded savings of $3.8 billion in the first nine months of 1988. That exceeds the $3.7 billion in savings achieved in all of 1987, the first year of the program.