July 25 - Profits at General Motors fell but strong sales in North America and cost cutting in Europe helped the automaker beat expectations. Fred Katayama reports.
Strong sales in North America and cost-cutting in Europe helped General Motors easily cruise past profit expectations, even though net income fell in the second quarter. Pickup trucks helped boost profit in North America to nearly $2 billion, but that was 15 percent less than what archrival Ford earned. Like Ford, the world's largest automaker drastically shrank its losses in Europe by cutting costs $400 million. But GM's CFO said Europe still remains "very challenging." GM did well in its stronghold, China, but profit fell 64 percent in its international operations because of pricing weakness in Australia and Southeast Asia. New products helped GM grow its global market share. This year, it's flooding showrooms with 40 new vehicles. Bank of America analyst John Murphy says its new full-sized pickups and other launches "will help GM stay competitive and likely maintain market share/support pricing over the next few years .... In addition, improving results in the tough European market will also be viewed positively by investors if sustained by GM." GM's shares have risen 28 percent this year and have nearly doubled in the last 12 months. But they'll have to triple in price before U.S. taxpayers breakeven on bailing out the company.