GM reported first quarter profit down 14% due to the economic slump in Europe and a drop in North American earnings.
During the first quarter GM’s profit dropped 14% to $865 million and revenue fell to $36.9 billion from $37.8 billion during the same period last year. The automaker’s operating profit in North America fell to $1.4 billion from $1.6 billion in 2012. GM managed to gain market share in the States, but sales incentives and higher spending on discounts hurt profits. From January to April, GM’s sales in the US increased 10%, surpassing the industry’s 7% pace. The company’s market share was up to 18.1% from 17.7%.
“We expect a stable market share of around 18% from GM with a more favorable earnings outlook for the second half of 2013, thanks particularly to the expected recovery in the full-size truck segment,” Toprak said. “Europe continues to be a drain on otherwise profitable North American operations.”
Losses in the European market during this period reached $175 million, from $294 million during Q1 last year. In 2012 the company lost $1.8 billion in the region but GM officials said that the automaker’s operations in this market begin to improve and the company plans to reach the break-even level by mid-decade.
“We actually gained a bit of market share in Europe during the quarter,” said Dan Ammann, GM’s chief financial officer. “It is too soon to call the bottom in Europe. When you have 20%-plus unemployment in a number of countries, it is still far too soon.”
Operations in South America dropped to a loss of $38 million from a profit of $153 million in the first quarter 2012. In China operating profit slid to $495 million from $521 million last year.