GM profit surges to $2.98B on sales of higher-margin trucks

Detroit (AP) — General Motors’ first-quarter net income surged to $2.98 billion as strong U.S. consumer demand and higher prices offset production cuts brought on by a global shortage of computer chips.

Despite the semiconductor shortage, GM stuck with full-year pretax earnings guidance of $10 billion to $11 billion issued earlier in the year, with full-year net income of $4.50 to $5.25. The company predicts a strong first half with a pretax profit of around $5.5 billion. Previously GM said the shortage would cost it $1.5 billion to $2 billion in earnings before taxes this year due to lost production.

The big profit increase was 12 times larger than the same period last year, when the start of the coronavirus pandemic forced automakers to shutter factories, limiting GM's net income to $247 million.

Shares of GM rose 3.3% to $57.16 in premarket trading Wednesday.

Excluding non-recurring items, GM made $2.23 per share from January through March, doubling Wall Street estimates of $1.05. Revenue of $32.47 billion was below estimates of $33 billion according to FactSet.

The Detroit automaker reported pretax income for a first quarter at $4.4 billion.

During the quarter, the company said it was able to divert precious computer chips to higher-profit models such as full-size pickup trucks and SUVs, and that brought the higher income.

In the U.S., GM's most profitable market, sales rose 4% from January through March compared with a year ago. But even with the gain, first-quarter sales of 639,406 vehicles was the second-lowest the first quarter since 2015, and the figures were 4% below the same period in 2019, according to Cox automotive.

Still, demand was strong and inventories were low, allowing GM to reduce discounts and raise prices. GM’s average sales price hit a record...