General Motors shares jumped 9% on Wednesday after the automaker delivered better-than-expected quarterly earnings, with strong demand for more expensive vehicles offsetting a decline in sales volume.

GM’s vehicle sales volume dropped by 14.7% in the third quarter from the previous year, reflecting declines across every region and every brand. Cadillac posted the smallest decline among GM’s marquee brands with a 3.9% drop.

But sales of several Chevrolet and GMC truck models exceeded expectations and the company was able to beat analysts’ estimates as its vehicle prices in the Unites States rose to an average of about $800 per vehicle to more than $36,000, a record for GM.

The company reported adjusted earnings of $1.87 per share as overall revenue rose 6% to $33.62 billion. Analysts had expected earnings of $1.25 per share on revenue of $34.85 billion.

“Our disciplined approach to the U.S. market, combined with strength in China and further growth of GM Financial, drove a very strong quarter,” CFO Dhivya Suryadevara said. “We will continue to take actions to mitigate headwinds including foreign currency volatility and commodity costs.”

Cadillac sales in China broke a record, up 4% over the previous year and 20% year to date.

Suryadevara told analysts on the earnings call that GM expects fourth-quarter performance to be strong, with solid sales of highly profitable crew-cab trucks. On news of the Q3 earnings, GM shares, which were down 18% for the year ahead of the report, rose 9% to $36.56 in trading Wednesday.

“Strong customer demand for more expensive vehicles loaded with options made up for the decline in the number of cars leaving dealer showrooms,” CNN said.

As CNBC reports, the auto industry has been showing signs of weak demand for new cars overall, particularly in North America. New vehicle sales in North America are expected to face further pressure as the U.S. Federal Reserve continues to raise interest rates.

But with sales of such trucks as the Silverado LTZ and the new off-road AT4 crew-cab models exceeding forecasts, GM expects to ship about 120,000 new trucks in the second half of 2018.

, , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *