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File photo of workers at the General Motors Oshawa, Ont., assembly plant.Moe Doiron/The Globe and Mail

General Motors Co. posted third-quarter profit and sales that set records and beat analysts' estimates - and still underwhelmed investors who have a nagging feeling that the industry's heydays are over.

Powered by demand for light trucks in the U.S. and luxury vehicles in China, net income more than doubled to $2.8-billion while revenue jumped 10 per cent to $42.8-billion, GM said in a statement Tuesday. Adjusted earnings of $1.72 a share exceeded the $1.47 projected by analysts in a Bloomberg survey.

The results, strong enough for GM to predict full-year earnings near the top of its previously announced range, couldn't overcome investors' concerns that industrywide U.S. sales are about to plateau after a record six years of gains. With Brexit-related issues threatening GM's plan to break even in Europe this year, investors pushed down the automaker's shares 2.4 per cent to $32.18 at 10:16 a.m. in New York.

"Investors must think this is as good as it gets and that it's peak auto," said David Whiston, a Morningstar Inc. analyst who has a buy rating on the stock. "It's frustrating because GM doesn't deserve to be down this much."

Concern about a potential slowdown has hurt automakers' shares this year, with declines for about 3 per cent through Monday for GM and 13 per cent for Ford Motor Co., compared with a 5.3-per-cent rise for the S&P 500 index. Ford, which reports Thursday, said last month that financial results will decline in 2017 as it boosts spending on new businesses such as driverless and electric cars while fixing weaknesses in luxury autos and emerging markets.

GM said it now expects full-year adjusted earnings near the high end of its previously stated range of $5.50 to $6 a share.

Regional Performance

Demand for high-margin sport utility vehicles in North America drove GM's performance, along with Chinese buyers' increased appetite for pricey models from the Cadillac and Buick brands. North American earnings before interest and taxes rose about $200-million to $3.5-billion, also the best ever for the period. One reason is the company's strategy of increasing sales to individuals, which have higher margins than fleet deliveries.

In the U.S., GM has benefited from stable sales and better pricing on its cars, which have transaction prices $5,000 higher than the average competitor. That has pushed EBIT margins in its North American business to 11.2 per cent, which is also the best-ever for the automaker. At Chevrolet, sales to retail customers rose 2 per cent from the year-earlier quarter.

Europe and South America continue to be trouble spots, and Chief Financial Officer Chuck Stevens told reporters that Brexit has derailed GM's push to make a profit in Europe business this year. Even so, GM was able to pare losses in Europe to $142-million in the quarter from $231-million a year earlier. South America lost $121-million, compared with $217-million a year ago.

The company had said in July that the U.K.'s plan to exit the European Union could cost it $400-million in this year's second half, as an expected drop in demand hits its British Vauxhall brand. Currency fluctuations related to Brexit cost GM $100-million in the third quarter, meaning the remaining $300-million may come in the fourth quarter.

"The pound sterling has deteriorated further, which creates another headwind for us," CFO Stevens said. "Breaking even this year is going to be very challenging."

Brexit Effects

To counter the Brexit effects and try to reach its goal of breaking even this year in Europe, GM is looking at cost cuts and raised vehicle prices by 2.5 per cent in the U.K. starting Oct. 1, Mr. Stevens said. "We will look across all aspects of the business and take whatever action is necessary to get the business back on track," he said.

Equity income from China, where its operations are run as joint ventures with local automakers, held steady at $459-million compared with $463-million in the same quarter last year. China vehicle sales rose 9 per cent to a record 2.7 million so far this year, and profitable crossover SUVs like the Buick Envision and Cadillac XT5 are making gains.

Cadillac sales jumped 79 pe rcent in the region from the year-earlier quarter.

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