DETROIT -- For months now, General Motors executives have told anyone who would listen that they intend to sustain healthy profits even if market conditions get tougher.
Last week, they walked the walk, posting a 28 percent jump in first-quarter pretax profit, to $2.66 billion, in the face of weakening demand that sapped its global sales by 2.5 percent.
GM was able to offset economic headwinds by selling more-profitable vehicles across its biggest markets while cutting costs in the most troubled regions. In South America, for example, where Brazil is in the throes of recession and political upheaval, GM slashed production by 35 percent and boosted prices on newer market entries. It cut the region's losses to $67 million, from $214 million, even as its sales sank 26 percent.
In North America, sales grew just 1.2 percent, to nearly 800,000, but operating profit rose 5.2 percent, to $2.3 billion, driven by an increase in pickup and SUV sales and stronger pricing from the recently launched Malibu sedan and Camaro sports car.
In China, GM offset slowing demand for smaller passenger cars with strong Cadillac sales and the success of recent crossover entries, including the Buick Envision and Baojun 560. Its pretax profits from China were flat at $518 million.
And GM essentially broke even in Europe, partly from strong sales of the redesigned Opel Astra compact, posting a $6 million loss after losing $239 million there a year earlier. GM has said the Astra is more profitable than the car it replaced.
Globally, its pretax profit margin grew to 7.1 percent from 5.8 percent a year earlier.
"GM is executing well," RBC Capital Markets analyst Joseph Spak wrote in a client note.
GM CFO Chuck Stevens said the company is applying the same formula in troubled markets such as South America as it has in North America in recent years: Improved products, a reduced reliance on low-margin fleet sales and right-sizing the business by eliminating fixed costs.
Stevens told reporters: "When the market recovers, we're going to be in a great position to take advantage of the upside."
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