General Motors Corp. yesterday reported record sales in the first quarter, but said its earnings dropped 33.6 percent, largely because of the cost of new-product development programs.
GM's net income for the first quarter was $1.07 billion ($3.26 a share), down from $1.61 billion ($5.11) in the year-ago period.
Earnings on Class E common stock -- created because of GM's $2.55 billion purchase last fall of Dallas-based Electronic Data Systems Corp. -- were $38 million ($1.26).
GM's sales for the quarter were $24.2 billion, 5.6 percent higher than the $22.9 billion a year ago.
GM's first-quarter earnings fell short of the $1.2 billion ($3.75) predicted by analysts polled by Automotive News, a major auto trade journal published in Detroit. The journal estimated that first-quarter earnings for the nation's Big Three car companies -- GM, Ford Motor Co. and Chrysler Corp. -- would total $2.5 billion, 21.8 percent less than the combined $3.2 billion earned in the 1984 quarter. GM is the first auto maker to report 1st-period results.
New-product expenses would be the main cause of the decline in profits, Automotive News said.
GM officials agreed yesterday, saying that "front loading" of new-product costs was taking its toll. "We're incurring one hell of a lot of expenses now on our future product programs," a GM spokesman said.
For example, GM is expected to spend $9 billion this year on new plants, equipment and tooling. That cost does not include research-and-development expenses.
GM recently has put two new plants on line: one remodeled operation in Lansing, Mich., now used to build compact, front-wheel-drive models; and another remodeled plant in Baltimore, used to build GM's "midivans," the Astro and Safari. The firm spent about $600 million on the Baltimore van project.
GM said its "basic earnings power remains strong" and that it is optimistic its earnings will improve "as the year progresses."