America's love of big autos translated into blowout results Thursday for General Motors, which also benefited from recovering sales in China following a big hit amid the coronavirus pandemic.
The US auto giant, which recently launched new sport utility vehicles to accompany its fleet of revamped pickup trucks, enjoyed lofty profit margins in North America, fueled by strong vehicle pricing and tight auto inventory.
Executives spoke of "pricing power" in the US, partly in the aftermath of US auto plant closures for about two months this spring due to Covid-19. Production resumed in May under strict safety protocols.
"You really have this demand out there that we haven't seen in a long time, especially for full sized pickups," Chief Executive Mary Barra said on CNBC. "We just keep seeing demand for trucks continuing to grow."
Barra said in an earlier briefing with reporters that she was confident that GM would be able to maintain auto production despite rising Covid-19 cases in the US.
"When the protocols are followed, we don't have facilities spread," she said, adding that the company has brought on temporary workers at times in recent months.
GM scored a 72 percent increase in third-quarter profit to $4.0 billion from the year-ago period. That translated into earnings of $2.78 per share, more than twice the expected level.
Revenues of $35.5 billion were roughly flat compared with last year's level.
Profit margins were "so great" during the period, that they could prompt analysts to boost longterm forecasts for the auto giant, said a note from JPMorgan Chase.
The better-than-expected results showed GM's ability to "manage the business through a global economy under severe stress," the company said.
Car sales in North America fell compared with the year-ago period, but GM said US sales increased sequentially throughout the quarter. Profits were boosted by cost-cutting efforts as GM has shifted investment from sedan models in the US to electric vehicles and trucks.
Global car sales fell compared with the year-ago period and dropped in most regions. An exception was China, which scored an 11.9 percent increase in car sales from the year-ago period to 771,425 autos.
Barra cited the need to get the coronavirus under control in the United States as an essential factor in demand. Other key dynamics for sales include whether Congress enacts another round of stimulus spending and the unresolved US presidential election.
"Hopefully in a short period of time we'll know who has won the presidential election and then we can get on and maybe even understand what the new stimulus package will be," Barra said. "All of those will be very positive for continuing this strong demand that we see in autos right now."
Shares jumped 4.0 percent to $36.67 in pre-market trading.