General Motors took a hit to third quarter earnings compared with last year due to European struggles, but handily beat Wall Street forecasts thank to strong demand for its vehicles in the U.S. and better profit margins.

The automaker's earnings fell to $1.48 billion, or 89 cents a share, compared with $1.74 billion, or $1.03 a share, in the year earlier quarter. Excluding one-time items, GM earned 93 cents a share, far above the 60 cents analysts polled by Thomson Reuters I/B/E/S had expected.

GM hares were up over 4% in pre-market trading on Wednesday on the news, which came a day after Ford and Chrysler also posted healthy earnings.

"GM is benefitting from good response to many of its recent new products such as Chevy Cruze, Sonic and Equinox, Cadillac ATS and others," says AOL Autos editor-in-chief David Kiley. "But the company also has lost two percentage points of share in the last year due to comeback of Toyota and Honda after last year's Japanese tsunami and a surging Hyundai, which tells me that it still has to sort out its marketing and the way it tells its story to car buyers."

GM said that its European operations, struggling under the weight of a prolonged recession on the continent, won't break even until mid-decade. But it's Pacific rim business continues to do well, especially its operations in China, which are among the very strongest in that country.

GM's ability to make profit is far greater today than it was before its 2009 bankruptcy tax-payer financed reorganization. Today, it has four fewer brands than it did then, having closed Saturn, Pontiac, Saab and Hummer. The U.S. government is still holding a 26% stake in GM.

"Today's GM announcement is positive news for Detroit and the American auto industry, said Arthur Wheaton, an expert on the automotive industry and senior extension associate at Cornell University's ILR School. While Europe continues to bleed euros, U.S. and Asian sales are helping GM and Ford, said Wheaton. "October sales may not be impressive due to Sandy but should be much better than last year...overall, Detroit has come a long way from 2008," said Wheaton.

As next week's election draws nearer, the automaker is once again drawn into a political fight between President Obama's campaign and that of challenger Mitt Romney. The Romney campaign is running ads in Ohio that insinuate that GM, and Chrysler, are shifting jobs from the U.S. to China, though every fact checker outside the Romney campaign has debunked the charges. [See: Romney Campaign Runs Misleading Auto Bailout Ad in Ohio.]

GM and Chrysler, which also benefitted from the tax-payer auto industry rescue in 2009, have tried to steer clear of responding to campaign ads and debate rhetoric. But both companies were drawn in this week.

"We've clearly entered some parallel universe during these last few days," GM spokesman Greg Martin said. "No amount of campaign politics at its cynical worst will diminish our record of creating jobs in the U.S. and repatriating profits back to this country." Separately, Chrysler CEO Sergio Marchionne refuted Romney's charges in a company-wide email that was shared with he media. "Jeep production will not be moved from the United States to China," Marchionne stated in the e-mail. "The numbers tell the story," followed by specific investments Chrysler has made in Detroit, Toledo and Belvidere, Ill. "Those include more than $1.7 billion to produce the successor of the Jeep Liberty and hire about 1,100 workers on a second shift by 2013."


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