On the back of strong internal combustion engine sales and pricing in North America, General Motors Co. beat Wall Street earnings expectations on Tuesday with third-quarter net income of $3.056 billion, down just 0.3% year over year, on revenue of $48.757 billion, up 10.5%.

GM's incentive spend in the quarter as a percentage of the average transaction price (ATP) was below the industry average, according to data from Cox Automotive, an automotive services company. Its September incentive spending was 6.7%, and the industry's was 7.3%. GM's ATP has held steady at nearly $51,500, which is down less than 2% year over year, according to Cox.

"We have been able to grow our retail market share in the U.S. with above-average pricing, well-managed inventories and below-average incentives," CEO Mary Barra told analysts on the company's third-quarter earnings call. "I want to be clear, though, we are not mistaking progress for winning. The competition is fierce, and the regulatory environment will keep getting tougher. That's why we're focused on optimizing our ICE and EV margins."

The third-quarter results encouraged GM to up its guidance range for the third consecutive quarter to adjusted earnings in the range of $14 billion to $15 billion, up from $13 billion to $15 billion and adjusted automotive free cash flow of $12.5 billion to $13.5 billion, up from $9.5 billion to $11.5 billion. The automaker expects its net income for the year will now be between $10.4 billion to $11.1 billion, up from $10 billion to $11.4 billion. The automaker will provide financial guidance for 2025 in the fourth quarter.

For the months of July through September, GM reported adjusted earnings before interest and taxes of $4.1 billion, up 15.5% year-over-year. GM's adjusted earnings per share of $2.96 was above the average Wall Street estimate of $2.43. GM's revenue also beat the Street's average estimate of $44.58 billion. GM's net income margin for the quarter was 6.3%, down slightly from last year's 6.9%.

Wedbush Securities Analyst Dan Ives called GM's results "eye-popping" in a Tuesday note.

"We believe this was a large step in the right direction as management continues to navigate the choppy waters and ultimately, was a long-awaited turnaround for the GM story proving testament to GM’s performance following its goals to balance production and profitability," Ives wrote.

Despite what analysts describe as a sluggish auto market, with consumers searching for more affordable options and lower interest rates, the Detroit automaker has maintained strong pricing and lower incentive spend.

CFO Paul Jacobson told analysts GM's pricing in the quarter was up $9 million year over year, which was better than what GM projected.

"About half of this pricing benefit was from really strong performance from our mid-size SUVs, especially the Chevrolet Traverse," Jacobson said. "The rest was primarily from pricing adjustments that we made on our full-size SUVs and the Corvette in the fourth quarter of last year, which have now been fully lapped."

Pretax earnings in GM North America totaled $3.98 billion in the quarter, up 12.9%. GM International's pretax earnings were $42 million, down from $357 million reported in the third quarter of 2023. GM reported a $137 million loss of equity income in China after reporting a profit of $192 million in the country during the third quarter of 2023.

GM and other U.S. automakers are struggling in China amid increasing domestic competition and changing consumer behavior there. GM has lost $329 million in China this year. In the third quarter, GM and its partners reported a 21% year-over-year drop in sales there. GM did see quarter-to-quarter gains. The automaker's 14.3% sequential growth rate there was the highest it's seen since the third quarter of 2022.

GM reported a loss of $383 million at Cruise, its autonomous driving unit, which is back to testing on roads in Houston, Phoenix and Dallas after pausing service last year following a pedestrian accident that led to regulator scrutiny of the company. The Cruise loss in 2024 is down from the $732 million it lost in the third quarter of 2023 since the automaker has slashed spending on the unit.

On Tuesday's earnings call with analysts, Barra said GM plans in the fourth quarter to have "a series of shareholder and joint-venture board meetings planned ... that will be focused on restructuring actions to make the business sustainable and profitable, and we will share next steps as soon as we can."

With losses and continuing difficulty in China, GM has been leaning on its North American business.

In its third-quarter sales report, the Detroit automaker reported its fleet deliveries fell 18%, but the automaker posted a 3% increase in retail sales and record electric-vehicle deliveries of 32,095 for a 60% year-over-year increase and a 46% increase from the second quarter — making GM the No. 2 seller of EVs in the U.S., a title formerly held by Ford Motor Co.

GM's full-size pickups also had a positive third quarter with their best year-to-date total sales since 2007, the automaker said.

GM's results come after its Oct. 8 Investor Day event where executives pitched investors on how the automaker is eliminating costs and planning to maintain 8% to 10% profit margins in North America on the back of its internal combustion engine products as it transitions to battery electric vehicles.

The automaker is aiming to hit $2 billion in cost savings by the end of 2024.

In the fourth quarter, GM says its EVs will be variable profit positive, meaning it's able to cover the cost of producing the vehicles. Executives expect to produce and wholesale about 200,000 EVs by the end of 2024. The company expects losses in EV earnings before interest and taxes to narrow by $2 billion to $4 billion in 2025.

GM is also planning to have a plug-in hybrid offering in 2027, on top of launching multiple battery electric vehicles for the Cadillac and Chevrolet brands this year.

Still, Garrett Nelson, vice president and senior equity analyst at CFRA Research, maintained a hold opinion on GM's stock on Tuesday writing: "We remain at a Hold on GM, as we think the company could lose market share in the near- and intermediate-term due to its lack of hybrid vehicle offerings and free cash flow will hampered by its massive capex (~$11B in 2024) and large spending related to EVs and battery cell development. In Q3, GM's global market share fell 60 bps Y/Y to 6.7% of worldwide automobile sales, but U.S. share was flat at 16.5%."

GM executives are anticipating lower earnings in the fourth quarter because it had to pull forward some full-size SUV production, which had a $400 million effect in the third quarter instead of the fourth. The lower earnings are also a result of expected lower ICE wholesale volume because of supply chain disruptions caused by the recent hurricanes affecting production and because GM is in the process of ramping up production of refreshed full-size SUVs, Jacobson told analysts.

GM executives didn't share 2025 projections other than to say full-year results will be similar to 2024. The automaker will have news in the coming weeks and months on its capital efficiency with its battery cell strategy of adding lower-cost chemistries and the successes its seen with the "winning with simplicity" program to reduce parts and increase efficiency across the automaker's lineup.

GM, Barra said, expects to have "something to share soon" on the finalizing of a deal with Hyundai Motor Co. to explore production and technology collaboration to develop vehicles, improve supply chains and advance clean-energy technology.

Ford reports earnings on Oct. 28. Stellantis NV reports revenues and shipments Oct. 31.

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