Strong US and China car sales and a drop in costs for the faulty ignitions recall helped General Motors double profits in the third quarter. The sales in the two biggest GM markets helped the company offset ongoing slumps in Europe, South America and elsewhere. With unit sales up 3.8% from a year ago to 2.42 million cars and trucks in the quarter, helped by a 17.3% jump in China.
The company meanwhile warned that its hopes for a return to stability in Europe were at risk to fallout from Britain's vote to pull out of the European Union, including the weak pound. Breaking even in Europe this year is going to be very very challenging, said GM chief financial officer. Net profits jumped to a better-than-expected US $2.77 billion from US$1.36 billion a year ago. The key difference was a net US$1.6 billion decline in costs for the recall of millions of cars for faulty ignition switches and dealing with related litigation for injuries.
Total revenues were up 8.6% to US$40.33 billion, while costs fell by US$2.9 billion to boost operating margins. Earnings per share, adjusted for special items and dilution, were US$1.72, far better than the US$1.42 expected. Bolstering its full-year outlook, GM said it expects 2016 adjusted earnings to come in at the high end of the US$5.50-US$6.00 a share range it set at the end of the second quarter. Earnings in 2015 were US$5.02 a share.
