By TOM KRISHER, AP Auto Writer
DETROIT (AP) — General Motors’ third-quarter net profit rose 36.7% as vehicle sales began to rebound from persistent parts supply chain troubles.
The Detroit automaker on Tuesday reported earnings of $3.3 billion from July through September, compared with $2.42 billion a year earlier.
The increase was fueled largely by a 24% sales increase in the U.S., by far GM’s most profitable market. The company said it is seeing improved supplies of computer chips, allowing it to build more vehicles and increase inventory on dealer lots.
It’s also selling more expensive pickup trucks and large SUVs. That boosted revenue for the quarter by 56% to a record $41.89 billion, though that’s still short of the $42.1 billion that Wall Street had expected, according to a survey by FactSet.
Excluding one-time items, GM made $2.25 per share, beating estimates of $1.88.
GM reiterated its full-year net income guidance of $9.6 billion and $11.2 billion. GM still expects pretax income of $13 billion to $15 billion.
Chief Financial Officer Paul Jacobson said the company isn’t seeing any sign that demand for new vehicles is slowing despite higher interest rates and inflation. “Pricing remains strong, demand remains strong for our products,” he told reporters early Tuesday.
Shares rose 5% before the opening bell.
GM finished and shipped about 75% of the 90,000 vehicles it built without one part or another in the second quarter, and Jacobson said the company is seeing better supplies of computer chips and other parts.
“Overall chips are getting better than certainly where they were a year ago,” he said.
The company has not seen any signs of a recession, but it’s continuing to watch the economy, Jacobson said. It has no plans to cut any workers, but is being selective in hiring, he said.
Yet rising interest rates and high gasoline prices, coupled with persistent inflation, could hurt GM from now into 2023. Edward Jones analyst Jeff Windau wrote in a note to investors that although sales have improved, they have yet to reach pre-pandemic levels.
“We believe sales will continue to rebound, but we expect near-term volatility,” Windau wrote.
The entire auto industry has been hit hard by shortages of computer chips and other parts since the start of the coronavirus pandemic. The industry shuttered plants early in the pandemic, but they came back faster than expected, and by then, the semiconductor industry had switched to making chips for computers, games and other consumer electronics.
The auto industry has been trying to get more chips ever since. Windau wrote that the virus is still affecting the supply chain and could cause further issues.
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