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GM earnings, revenue expected to fall in 1Q

DETROIT (AP) -- General Motors Co., like rivals Volkswagen and Ford, had one major weakness in the first quarter: Europe.

GM, which reports first-quarter earnings Thursday, saw strong sales of some of its most profitable vehicles in North America and China in first three months of the year. But those results were tempered by tumbling sales in Europe, where car-buying has been depressed by a government debt crisis and high unemployment. Ford said last week it lost $462 million in Europe in the first quarter, while Volkswagen's profits fell 38 percent due to falling European sales. GM's sales fell 13 percent in Europe in the quarter, a steeper drop than the 10 percent industry average.

Wall Street analysts polled by FactSet estimate that GM's revenue to fell 3 percent to $36.6 billion compared with the first quarter of 2012, largely because of the decline in Europe.

WHAT TO LOOK FOR: GM's global sales were up 3.6 percent to nearly 2.4 million in the first quarter. Some of its most profitable vehicles — Cadillac luxury sedans and full-size pickups — were also its best sellers.

GM saw record first-quarter sales of 816,373 vehicles in China, up 10 percent from the same quarter a year ago. Among the hot sellers was the Cadillac XTS full-size sedan, which went on sale in China in February. Chinese buyers snapped up more than 2,000 XTS sedans in March alone, despite their steep starting price of $56,000.

The Cadillac XTS and smaller ATS also gave GM a boost in the U.S., where first-quarter sales rose 9 percent to 664,963. GM outpaced the industry's gain of 6 percent. U.S. Cadillac sales jumped 38 percent while Buick sales were up 27.5 percent thanks to the new Verano small car and Encore small utility.

GM also saw a 22-percent increase in Chevrolet Silverado full-size truck sales in the U.S. as home building and other construction picks up.

GM maintained its prices and didn't depend too heavily on clearance sales and other incentives, which can hurt profits and brand image. Kelley Blue Book estimates U.S. buyers paid an average of $34,257 for a GM vehicle in the January-March period, up slightly from a year ago.

Stifel Nicolaus analyst Jamie Albertine, who has a "Hold" rating on GM's shares, said he believes GM is ahead of schedule in its European restructuring. But he said the outlook is still cloudy in South America, where GM and other automakers have been hurt by foreign exchange losses and political uncertainty. Albertine lowered his 2013 earnings estimate by 2 cents to $3.35 per share, but raised his 2014 estimate by 2 cents to $4.37.

WHY IT MATTERS: GM is smaller than it was before its 2009 trip through bankruptcy court, but still employs 213,000 people worldwide, including 80,000 in the U.S. The auto industry has been a leader in the U.S. economic recovery. Also, the government still owns 19 percent of GM's stock, which it got in exchange for a $49.5 billion bailout. The government is still $21.5 billion in the hole on the bailout and it almost certainly will lose billions.

WHAT'S EXPECTED: Analysts polled by FactSet forecast earnings of 54 cents per share on revenue of $36.6 billion.

LAST YEAR'S QUARTER: GM earned 60 cents per share on revenue of $37.8 billion.