General Motors experienced a 14% decrease in its net profit in the first quarter to $865 million amid the decline in earnings in North America and as European losses dropped. For the period from January to March, GM was profitable – its 13th straight month of earning a profit after it exited from a government-led bankruptcy in the middle of 2009.
These figures are inclusive of one-time costs that removed $170 million from the net profit of GM. The earnings before interest and taxes and with the exclusion of one-time items (the figure that GM thinks is the best measure of its results) decreased by 19% to $1.76 billion. Its pretax profit in North America decreased by 14% to $1.41 billion. According to GM, its bottom line was affected by weaker pricing and lower production volumes in North America.
It fell by about $400 million compared to the previous year. CFO Dan Ammann said that the lower pricing and wholesale deliveries to dealerships were partly because of the changeover to GM's next-generation full-sized trucks.
GM had temporarily suspended operations at its pickup plants to prepare for the production of the redesigned 2014 models. It’s set to be launched within weeks. The company is offering huge discounts for the models on their way out. Full-sized SUVs are expected to follow. In the first quarter of 2013, GM’s average incentives (a percentage of the average transaction price) increased to 11.5% from 10.4% for the same period the previous year.
GM said that on average, its incentives in the first quarter were 16% higher than that of the industry. In a statement, CEO Dan Akerson said that European pretax losses fell to $175 million, from a $294 million loss the previous year due to “strong cost actions" and sales of newly launched vehicles like the Opel Mokka small crossover. Ammann said that GM is maintaining its target of achieving breakeven in Europe by the middle of the decade even when he hasn’t seen signs that Europe’s recession will ease up soon.