The Strategist

GM increases profit by 74% thanks to SUVs and pickups

11/06/2020 - 02:39

General Motors (GM) increased its net profit in the third quarter by 74% (to $4 billion) compared to the previous year, according to the company's financial report.

This result turned out to be much better than predicted by analysts interviewed by FactSet. After the announcement of the results, the carmaker's shares rose by approximately 4.5%.

The American concern managed to fully recover from the COVID-19 pandemic and the quarantine restrictions imposed by the authorities in the spring. According to Morgan Stanley, demand for cars in the USA has already recovered to pre-crisis levels two months ago. GM's revenue for the third quarter was $35.5 billion, which is identical to last year.

To a large extent, this was possible due to increased demand for large-size cars in the USA (crossovers, SUVs and pickups). These cars are more expensive, which ultimately offset the overall 10% drop in sales in the country at the end of the quarter.

China also helped the concern: local sales increased by 12% compared to last year. At the same time, the Chinese market was particularly successful in selling the group's expensive car brands Buick and Cadillac, whose sales grew by 26% and 28% respectively.