GM offers buyouts to cut costs

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News of the buyout comes after GM reported strong third quarter earnings on Wednesday showing an operating profit of $2.5 billion and a healthy 10.2 percent profit margin for its North America region.

Employees who are eligible for the buyout have until November 19 to decide. GM declined to disclose the number of people it wants to take the buyout offer or the buyout program's expected cost.

Depending on how many workers take the offer and other cost-cutting efforts, Morrissey said, "we'll re-evaluate doing an involuntary program after the first of the year".

Shares of GM, which had risen about 7 percent after the company announced its third-quarter earnings this morning, were up almost 10 percent after news of the buyouts broke. "Even with the positive progress we've made, we are taking proactive steps to get ahead of the curve by accelerating our efforts to address overall business performance", said Morrissey in a statement. The stock was up 8.6 per cent to $47.94, after mostly falling since June. Ford, however, has an older product line, and said its net pricing in North America fell by $318 million in the third quarter.

GM's US rival Ford said in early October it plans to thin the ranks of its salaried workforce by the second quarter of next year.

Excluding one-time items, GM earned $1.87 a share in the third quarter, easily beating the $1.25 average analyst estimate, according to I/B/E/S data from Refinitiv.

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Revenue jumped 6.4 per cent to $47.11 billion, also topping forecasts.

In addition to the buyout announcement, GM said it booked a record $500 million in income from its joint ventures in China, GM's largest market by volume.

Last year, GM sold its European Opel and Vauxhall units to France's PSA Group.

That includes GM transitioning its focus to self-driving vehicles and other new technologies.

Retired Chief Financial Officer Chuck Stevens hinted at white-collar cutbacks in April of 2017 when he told analysts that GM is looking for cuts as it simplifies its business after its exit from Europe.

Suryadevara said GM expects tariff-driven commodity price increases to cost the company $1.32 billion this year, $526.39 million in the third quarter alone. There is also a threat that costs of auto parts could rise if the Trump administration goes ahead with plans it is weighing to put tariffs on imported vehicles and parts. Simplification "will allow us to take significant structure out of the business, whether it's corporate staff, whether it's engineering staff".

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