General Motors has announced significantly better-than-anticipated third-quarter earnings, along with a forecast indicating that the company is poised to achieve record earnings in 2024, a mere twelve months after a protracted and costly strike by United Auto Workers union members.

The corporation disclosed an adjusted profit of $3.4 billion for Q3, surpassing the $3.2 billion recorded in the same period of the previous year, which was partially affected by the initial two weeks of a strike that extended beyond six weeks. The adjusted earnings for the first three quarters of the year have climbed to $9.9 billion. Revenue experienced an over 10% increase, reaching $48.8 billion, which not only exceeded analyst predictions by nearly $800 million but also outpaced the 5% growth in the number of vehicles sold. This suggests that GM is commanding higher average prices for its vehicles this year compared to 2023. The average transaction value in North America has approached the $50,000 mark. Last year, GM had estimated that the strike had cost the company $1.1 billion. Throughout the strike, the company had contended that it could not accommodate the union's wage demands without jeopardizing its competitiveness against non-union automakers.

However, it ultimately consented to an immediate 11% pay raise for workers, with additional increments scheduled to push wages up by at least an additional 14 percentage points over the subsequent four years. The union's rallying cry during the strike had been that record profits should warrant a record contract. The agreement reached included the most substantial wage increases ever secured by the union at GM. Despite this, GM has raised its earnings projections for the remainder of the year.

The updated guidance suggests that the company's full-year earnings are now expected to surpass the record profit achieved in 2022. The robust results and guidance have propelled GM's shares up by 2% in pre-market trading. Prior to this, the shares had already seen a 37% increase year-to-date through Monday's close. GM's CFO, Paul Jacobson, stated on Monday that the company had taken preemptive measures to cut costs in anticipation of the pay raises for its unionized workforce. He described this as a "cost of doing business" and expressed no regrets over the UAW contract.

Jacobson commended the GM team for elevating its profit target, highlighting the company's ability to "overcome inflationary pressures." If there is a challenge for General Motors, it lies in its non-union operations in China, where the company reported a loss of $137 million for the quarter, contrasting with the $192 million profit it had made in the same period a year earlier. The number of vehicles sold in China during the quarter plummeted by 37% to 372,000, due to heightened competition from domestic automakers and what GM described as "challenging market conditions." China, once GM's largest market for vehicle sales, now accounts for just over half of its US sales volume in the third quarter.