The largest US automaker posted earnings of $4.1 billion, excluding special items, up from $2.5 billion on that basis a year earlier. It was far better than the $2.1 billion that analysts had forecast — and up 64% from the earnings GM posted in the third quarter a year ago.

Revenue was essentially flat at $35.5 billion, matching forecasts. GM was able to maintain sales despite a 4% decline in the number of cars sold worldwide. The shutdown of auto plants earlier in the year because of health protocols limited inventories of vehicles available for sale, and the recession also hurt demand, especially from some fleet buyers such as rental car companies.

But the demand that was there drove the average price of the vehicles higher, allowing GM to maintain flat sales revenue.

“Sales in the US and China are recovering faster than many people expected, and GM is benefiting from robust customer demand for our new vehicles and services, especially our full-size pickups and SUVs,” said John Stapleton, GM’s interim CFO.

But the real improvement came in the company’s profit margin, which jumped to 14.9%, up from 8.4% a year ago.

GM suspended its dividend in April and increased its borrowing as a way to maintaining cash during the downturn caused by the pandemic. But it announced Thursday that it was able to pay down $5.2 billion of its credit lines during the third quarter, and an additional $3.9 billion in October. The company expects to repay the balance by year-end.

CEO Mary Barra said that if the current recovery continues GM would likely resume a dividend sometime in the middle of 2021.

“We know this is a high priority for our shareholders,” she said on a call with analysts.

But the company is still relatively flush with cash. It generated $9.1 billion in cash flow from its auto operations during the quarter, leaving its auto operations with $30.2 billion in cash at the end of the quarter, up from $17.3 billion at the start of the year, before Covid-19 disrupted the economy.

And that cash generation is giving GM the cash it needs to invest in plants and new products, such as electric vehicles.

“Our North America business, and especially the strength of our full-size truck platform…and full-size SUVs, gives us excellent opportunity to self-fund our growth in [electric vehicles],” Barra said.

Shares in these American automakers are surging. None of them are Tesla
But even as GM prepares to make a shift to an all-electric future, it’s investing in making more gasoline powered vehicles, such as full-sized SUV and pickups.
On Thursday, the company announced plans to invest up to $1 billion in its Oshawa, Ontario, plant to start building pickup trucks in early 2022. The investment comes as part of labor deal reached Thursday with Unifor, the union representing Canadian autoworkers, which includes a plan for GM to hire 1,400 to 1,700 workers. The Oshawa plant was among five plants that GM said in November 2018 that it planned to close, along with four US plants, in a cost saving move.

“We have been operating our full-size pickup plants around the clock to meet exceptionally robust demand for the Chevrolet Silverado and the GMC Sierra in the United States and Canada,” Barra said. “When the plant comes back online in early 2022, we will see a significant increase in our full-size pickup production capacity.”

Shares of GM (GM) gained about 4% in midday trading on the news.

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