GM’s high-margin pickup trucks and small SUVs generate profits

General Motors

General Motors on Wednesday reported a quarterly profit that surpassed Wall Street expectations, due to high-margin pickup trucks and small SUVs in the U.S. as well as cost cutting.

The whole GM’s profit came from North America, where those lucrative models assisted overcome a drop in the number of vehicles it sold. The company’s operations in China and South America together added nothing to the automaker’s bottom line in the quarter. Shares increased 1.4 percent.

The fourth-quarter profit, which was stronger than expected was driven by significant U.S. results, stood in contrast to the job cuts GM has started to make in its salaried and hourly workforces.

The automaker has received criticism, including from U.S. President Donald Trump, following their announcement in late November it would not allocate new product to five plants located in North America that produce less-popular sedan models in general, indicating they will likely close.

GM CEO Mary Barra has made it clear that, regardless of the criticism, the cutbacks are needful for the automaker’s long-term financial stability and to pay for investing in electric and self-driving vehicles.

“We can’t run at a 70 percent utilization,” Barra stated Wednesday regarding the company’s plant usage rate. “We had to improve that … It’s a transition we have to go through.” An industry rule of thumb is that automakers’ lose cash when plants operate below 80 percent capacity.

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