GM Profit Jumps
General Motors Co. reported surprisingly strong third-quarter profits Wednesday, as it also said it offered buyouts to thousands of salaried workers to cut costs amid slowing sales in the global car business. The No. 1 U.S. auto maker by sales reported a 25% jump in its third-quarter operating profit to $3.2 billion, handily beating analysts’ forecasts. Strong demand for its lucrative pickup trucks and sport-utility vehicles in the U.S. lifted results, as did a record quarterly profit in China.
The company also said Wednesday it had sent buyout offers to 18,000 salaried workers—roughly 36% of its white-collar workforce in North America—in a cost-cutting effort that signals market pressure on costs and sales are increasing.
Although the company did not announce the buyouts as part of its earnings report, CEO Mary Barra told investors that GM would be taking “steps to transform the workforce to ensure we have the right skill sets for today and the future while also driving significant efficiency.” GM has not disclosed the details of the offer, but typically it is a formula that offers a certain amount of weekly pay for every year of service.
GM and other automakers are making a major push to develop self-driving vehicle technology along with electric vehicles and ride sharing services. GM has created a separate company called Cruise for those efforts. The company expects to spend $1 billion on Cruise this year.
GM is also dealing with some higher costs associated with tariffs on imported steel and aluminum, which has raised its commodity costs by about $300 million in the third quarter and could raise costs by $1 billion next year. There is also a threat that costs of auto parts could rise if the Trump administration goes ahead with plans it is weighing to put tariffs on imported vehicles and parts.