UPDATE 2-GM shares rise on earnings beat, forecast

UPDATE 2-GM shares rise on earnings beat, forecast
From Reuters - October 24, 2017

DETROIT (Reuters) - General Motors Co (GM.N) posted a stronger than expected pre-tax profit for the third quarter before related to the sale of its European operations, and shares jumped as GM reaffirmed its full-year earnings outlook and a promise to slash stocks of unsold vehicles.

The results sent the companys shares up 4 percent in pre-market trading.

The No. 1 U.S. automaker said it expects U.S. vehicle sales to remain stable at an annual pace of about 17 million light vehicles in 2017, and we expect that in 2018 as well, GM Chief Financial Officer Chuck Stevens told reporters on Tuesday.

The U.S. auto industry has been coming off a strong run of sales that culminated in a record 17.55 million units in 2016. Industry analysts have predicted a slight decline for U.S. new car sales in 2017, driven in part by a flood of nearly-new, low-mileage off-lease vehicles into the market.

GM posted lower revenue for the quarter as it shuttered plants in North America to reduce production and tackle bloated inventory levels, especially of unpopular sedan models as consumers move increasingly to pickup trucks, SUVs and crossovers.

GM had 76 days supply of unsold vehicles at the end of September, down from 88 days a month earlier and over 100 in the summer. The companys wholesale volumes were down 26 percent versus the same quarter in 2016.

GM said on Tuesday it was on track to meet its goal of 70 days supply of vehicles in United States by the end of the year.

But as GM has embarked on a months-long process to trim excess supply, it relied heavily on consumer discounts to sell vehicles. Discounts as a percentage of the average transaction price totaled 13.7 percent, slightly above the industry average.


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