All three U.S. automakers reported higher operating profits for the third quarter, thanks mainly to the great results at home, they also learned an important lesson: if you make a better car, people will pay more for buying it.
GM’s profit margin was 9.3 % (before interest and taxes), while Ford reached 10.6 % pre-tax, while Chrysler took home just 4.9 %. North American profit margins were some of the best the companies have encountered in the years after the economic crisis. Together, the three US automakers got around $5.7 billion in pre-tax profit in North America between July and September. That’s a huge increase of $1 billion from a year ago.
The answer is simple: higher car prices. GM announced that better pricing took its third-quarter earnings up by $600 million, while Chrysler had a $343 million jump and Ford added some $100 million. More importantly, Detroit’s newest models are among the greatest they’ve ever made. GM’s new Chevrolet Impala sedan and Silverado pickup, for example, earned rave reviews from publications, including Consumers Reports. Ford can’t fill in the orders for its popular Escape crossover. Chrysler’s Ram pickup has been adding new awards and constantly increasing its market share.
The average transaction price for a GM, Ford or Chrysler vehicle in the quarter was $33,833, rising from $33,151 a year ago, according to Kelley Blue Book.