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General Motors earnings beat, but concerns loom about sales, inventories

General Motors' second-quarter earnings outpaced Wall Street's expectations on Tuesday, but analysts and investors remain concerned about falling car sales and swelling inventories.

The auto industry is coming off of years of record sales. The industry is facing both declining demand and an increasing preference for SUVs, light trucks and crossovers. As a result, GM and others are having to adjust the mix of vehicles they are producing.

GM shares were recently up less than 1 percent midday Tuesday.

Here's how the company did compared with what Wall Street expected:

  • EPS: $1.89 from continuing operations vs. $1.69 expected, according to Thomson Reuters.
  • Revenue: $37 billion vs. $40.15 billion expected, according to Thomson Reuters.

GM reported second-quarter net income of $2.4 billion, or $1.60 per share, down from $2.8 billion or $1.74 per share a year earlier. Excluding one-time charges, the company reported earnings per share of $1.89.

On that basis, analysts had on average expected earnings per share for the quarter of $1.69.

The company reported revenue for the quarter of $37 billion, down from $37.4 billion a year earlier and below the $40.1 billion expected by analysts.

Results in the latest quarter excluded losses from the company's European operations, which are being sold to France's PSA Group.

"Disciplined and relentless focus on improving our business performance led to a strong quarter and very solid first half of the year," said CEO Mary Barra, in a press release. "We will continue transforming GM to capitalize on growth opportunities and deliver even more value for our shareholders."

The automaker has lately been extending shutdowns at some factories, and reports have surfaced that GM may eliminate several sedan models.

In an interview with CNBC, Chuck Stevens, GM's executive vice president and CFO, declined to discuss details of any planned cuts. However, he said, "We are always going to be focused on aligning supply and demand, and as we have seen the shift from passenger cars to crossovers we have taken very proactive action to reduce our production of passenger cars."

Still, GM expects it will be able to reach its target for 2017, which calls for earnings of $6 to $6.50 per share.

In the second quarter, the company said it delivered 725,000 vehicles in the U.S., driven by a 24 percent jump in sales of crossover vehicles.

It reported $3.5 billion in operating profits for North America, but its U.S. car sales are down more than 18 percent so far this year. However, U.S. truck sales are up almost 6 percent year to date.

GM has also been in talks with the United Auto Workers about the threat slumping car sales pose to factory jobs, Reuters reported Thursday.

In China, GM delivered 852,000 vehicles, a 1.6 percent increase compared with the same quarter last year.

The company delivered 160,000 vehicles in South America, an 18 percent increase over the second quarter 2016, and above the industry's overall sales growth of 13 percent.

—Reuters contributed to this report.

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