DETROIT — General Motors said Thursday its net income surged 74 percent in the third quarter to $4 billion as the automaker continued to recover from the coronavirus pandemic and replenish inventories of pickups and SUVs.
The gain compares with net income of $2.3 billion in the third quarter of 2019, when GM took a $1 billion hit from the first two weeks of the UAW strike.
It follows sizable third quarter profits from Ford Motor Co. and Fiat Chrysler Automobiles, as the Detroit 3 rebounded from dismal results in the spring when sales dropped and they halted production for nearly two months.
The three automakers earned a total of more than $10 billion in North America during the latest quarter, and each company achieved a double-digit margin in the region, versus losing a combined $1 billion in the previous period.
“Sales in the U.S. and China are recovering faster than many people expected, and GM is benefiting from robust customer demand for our new vehicles and services, especially our full-size pickups and SUVs,” John Stapleton, interim CFO, said in a statement. “These strong fundamentals and the positive impact of our transformation and austerity measures are helping us to deliver solid earnings, generate significant cash and quickly repay the debt we incurred during the early days of the pandemic.”
GM earned an adjusted $4.4 billion in North America before interest and taxes during the quarter, compared with $3 billion a year earlier.
Global revenue was flat, at $35.5 billion, but adjusted earnings before interest and taxes rose 78 percent to $5.3 billion. The automaker’s profit margin increased to 14.9 percent from 8.4 percent in the third quarter of 2019.
GM’s international regions swung to a $10 million gain in the quarter from a $65 million loss a year earlier, and China equity income was flat.
Earnings from GM Financial increased 70 percent to $1.2 billion.
GM said it repaid $5.2 billion of the money it borrowed in March to weather the pandemic during the third quarter and $3.9 billion more in October. The automaker expects to pay off the remaining debt by the end of the year. GM also put $200 million toward its restructuring plan during the third quarter, bringing total savings to $4 billion since 2018.
Shares of GM were up 3.8 percent to $36.57 in early trading Thursday.
“We entered the pandemic in a strong position and acted decisively to keep our teams safe, conserve cash and preserve liquidity, all while keeping our critical product programs on track,” CEO Mary Barra said. “Now we are well positioned to meet rising customer demand, accelerate our transformation and deliver our vision of a world with zero crashes, zero emissions and zero congestion.”
GM’s light-vehicle sales in the third quarter fell 9.9 percent on low inventory of pickups and SUVs. But some crossover volume climbed: Sales of the Buick Envision, Chevrolet Blazer and Cadillac XT6 each rose more than 40 percent. GM doesn’t provide a month-by-month breakdown of sales figures, but the automaker said sales rebounded significantly in September.
Still, tight inventory at dealerships continues to be a challenge after the pandemic prompted plant shutdowns in the spring. In October, GM’s days’ supply was estimated to be 52 days, down from 83 days a year earlier, according to Morgan Stanley.
GM also reimbursed employees’ missed earnings during the quarter. In July, the automaker said it would stop deferring 20 percent of employees’ pay, which started April 1 as a way to conserve cash. Initially, GM said the deferrals could last six months.
Barra said discussions are continuing with truck maker Nikola Corp. about a planned partnership between the companies that was delayed by allegations of fraud against Nikola. The deal had been scheduled to close at the end of September and would be canceled if not finalized by Dec. 3.
GM in September announced a partnership with electric truckmaker Nikola Corp. Under the proposed deal, GM would build Nikola’s electric Badger pickup with its proprietary Ultium batteries and provide fuel cells for the Badger and Nikola’s semitrucks. In exchange, GM would get an 11 percent stake in Nikola, a $700 million payment and electric vehicle credits.
A report from short seller Hindenburg Research followed the partnership announcement, accusing Nikola founder Trevor Milton of misleading investors about Nikola’s capabilities and products. The claims led to Milton’s resignation as executive chairman.