By Joseph White and Paul Lienert
DETROIT (Reuters) -General Motors Co on Tuesday lifted its full-year profit and cash flow forecasts, citing stronger-than-expected demand and higher prices, but executives cautioned the price gains over 2022 won't last as the year goes on.
After better-than-expected first quarter results, the No. 1 U.S. automaker said it expects full-year pre-tax profit in a range between $11 billion and $13 billion, up $500 million from a prior forecast.
Consumers willing to pay a rich price for a new vehicle gave GM a significant boost in the latest quarter. Higher prices added nearly $1,800 a vehicle to GM's North American pre-tax profit, the company reported.
"As we lap last year’s price increases, we are planning and assuming we give some of that back and are net flat for the year," Chief Financial Officer Paul Jacobson told analysts during a call Tuesday.
GM shares fell 1.9% after the company's call with analysts.
Wall Street sees Tesla (NASDAQ:TSLA)'s recent price cuts as a threat to rival automakers' margins. "We are going to work toward profitable growth" in electric vehicle sales, Chief Executive Mary Barra told analysts Tuesday.
Barra reaffirmed a goal of building 400,000 EVs in North America from 2022 through the first half of 2024.
GM's latest numbers also underscored how China has gone from being a reliable profit engine to a problem.
Pre-tax income from GM's China joint venture operations plunged by half to about $100 million in the quarter as unit sales fell by 23%. GM once had a leading position in the world's largest auto market.
Barra promised "aggressive measures on taking out structural costs" in its China operations to counter competition from Tesla Inc , BYD and other Chinese EV manufacturers.
China has 100 vehicle brands vying for sales and 50% capacity utilization, Barra said. "I don’t think that’s a steady state."
Barra said GM can rebuild profitability in China over the next two years as it launches new electric vehicles.
GM's first-quarter results beat the company's internal forecasts, Jacobson said. Savings from a drive to cut $2 billion from fixed costs by the end of 2024 "are flowing to the bottom line faster than we originally anticipated," he said.
About 5,000 employees have accepted buyout packages to leave the company, GM said this month.
For the first quarter of 2023, GM reported adjusted pre-tax profit of $3.8 billion, or $2.21 a share, on revenue of $40 billion, down from pre-tax profit of $4 billion on revenue of $36 billion a year ago.
Lower profit at GM's finance unit and a wider loss at the Cruise robo-taxi operation offset a $500 million increase in profit from the automaker's North American operations.