European loss drags down GM earnings General Motors reported lower first-quarter net income of $1.32bn, weighed down by a loss at its Opel/Vauxhall division and writedowns related to its operations in Europe and India. The Detroit-based carmaker reported a $256m operating loss for the first quarter in Europe, where it is preparing a new business plan for Opel, compared with a break-even result a year ago. Dan Akerson, chief executive, described GM's regional business there as a "work in progress." "We'll continue to work on both revenue and cost opportunities until we have brought GM to competitive levels of profitability," Mr Akerson said in a statement released with the company's earnings. GM, which was bailed out by US taxpayers in 2009, is the global car industry's largest producer by reported vehicle sales. However, its profit margins lag behind those of its nearest peers, Toyota and Volkswagen, and its profits are under scrutiny in the US because the government still holds a stake in the company. GM's net income for the quarter was 61 per cent lower than the $3.37bn net profit it reported in the first quarter of 2011. However, its net result beat most analysts expectations but compared badly with a year ago, when its earnings were bolstered by the sale of its stake in supplier Delphi. The company's quarterly revenue was $37.8bn, 4 per cent higher than the $36.2bn it reported a year ago. The special items GM booked for the quarter totalled $612m and included goodwill impairment charges of $590m in its ailing GM Europe division, and charges of $106m related to its joint venture in India. The company's core North American business, which is benefiting from an industry-wide recovery in car sales, reported an operating profit of $1.69bn, 35 per cent higher than the $1.25bn it reported a year ago. GM said that it now expected US light vehicle sales to reach 14m to 14.5m units this year, up from its previous forecast of 13.5m to 14m. GM's international operations, primarily its large business in China, reported quarterly operating profit of $526m, 10 per cent lower than the $586m it reported a year ago. The carmaker's quarterly profit in South America, which until recently was lossmaking, was $83m, compared with $90m in the first quarter of 2011. In Europe GM, like most of its mass-market competitors, faces intense pressure on its margins this year because of competitive discounting caused by a structural oversupply of cars. Opel is barred from closing plants or shedding staff until 2014 under agreements with its unions, but executives have indicated that they may need to do this in order to bring GM's European business back to profitability. Mr Akerson said last week that GM would be ready to share details on its plans for Opel by the summer.