General Motors' first-quarter profits slumped 69% to $1bn as the automaker struggled in Europe – but the decline was offset by continued strength in the US.
The health of GM has become a battleground for the 2012 election. Republican candidate elect Mitt Romney has attacked the bailout that saved the company as president Barack Obama has pointed to the trumpeted the rescue.
GM's latest results are likely to strengthen Obama's argument, with the automaker bolstering both revenue and operating margins in the US. In North America, GM made $1.69bn, compared with $1.3bn a year ago. The company said it expects profitability in the region to remain level through the second and third quarters of the year.
Global vehicle sales rose 2.7% to 2.28m units from 2.22m a year earlier, cementing GM's position as the world's biggest car manufacturer.
Profits dropped dramatically because of a tough comparison with last year. In the first quarter of last year the company's earnings were boosted by $1.5bn from the sale of Delphi Automotive.
But the results showed how weaknesses in Europe continues to weigh on the company. In Europe, GM lost $256m, compared with a $5m profit a year ago.
"Europe remains a work in progress," said GM chief executive Dan Akerson. "We'll continue to work on both revenue and cost opportunities until we have brought GM to competitive levels of profitability."
GM finance chief Dan Ammann said it was "too soon to tell" when losses in Europe will bottom out.
Profit from international operations, which includes China, fell to $529m from $586m. The company also slipped in South America,where GM made $83m in the quarter, down from $90m a year ago.
Michelle Krebs, senior analyst with Edmunds.com, said: "This is a company that is now far from bankruptcy, but there's still a lot of work to be done." She said the results were "better than expected." "In the US their market share is the lowest it has been in decades, but they are making more money per vehicle," she said.
But Europe continued too be a major problem, said Krebs, and GM faced increasing competition in China and the rest of the world.
The US government still holds a 32% stake in GM after its $50bn bailout, and is hoping to sell out at a profit. GM's shares have risen sharply this year but are still below the $33 price they were sold at when the firm rejoined the stock market in 2010.
