General Motors boosts pretax profit on strong U.S. sales

The North American embrace of new cars and light trucks drove General Motors to record pretax profit in the third quarter, though recall costs ate into the final earnings.

The result seems stronger when taking into account the $1.5 billion US in costs related to its deadly ignition switch recall it took in the third quarter.

GM revealed in September that the total cost of the ignition switch recall was $5.3 billion US.This quarter it spent $900 million in legal and another $600 million to settle multiple wrongful death and shareholder lawsuits.

But strong revenue in North Americaoffset downturns in China, Latin America and Europe.

North American market strong

Total revenue from July through September fell oneper cent to $38.8 billion, but still beat analysts' forecasts. Almost three quarters of GM's revenue came from North America.

After record sales in 2014, GM is on track for another record year as consumers snap up pickup trucks.

GM's earnings before tax and interest in North America were $3.3 billion, up from $2.3 billion a year ago.

Chief Financial Officer Chuck Stevens said the GM's North American profit margin, the per cent of revenue it gets to keep, hit a record 11.8 per cent for the quarter, well beyond its target of 10 per cent.

Pretax income in China fell by four per cent to $463 million US, but Stevens said Chinese revenues had not "fallen off a cliff" as many analysts had predicted given the economic slowdown there.

The company still faces further costs from the ignition switch fault, which led to 124 deaths acknowledged by the company. It has six lawsuits scheduled for trial and about 400 claims that have yet to be settled.

General Motors workers in Oshawa, Ont. are still waiting to hear about the future of their plant after 2017.