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US car giant General Motors (GM) has reported a sharp drop in quarterly profits, in part due to its loss-making European operations.

Net profit for the first three months of the year was $1.35bn (�830m), compared with $3.41bn a year earlier.

GM Europe made a loss of $300m in the period, compared with breaking even a year ago, while goodwill adjustments reduced profit by $600m.

However, record demand in China helped push overall revenue up 4% at $37.8bn.

Record profits "The US economic recovery, record demand for GM vehicles in China and the global growth of the Chevrolet brand helped deliver solid earnings for General Motors," said GM chief executive Dan Akerson.

"New products are starting to make a difference in South America, but Europe remains a work in progress."

The carmaker also raised its sales forecast for this year, estimating sales of 14 to 14.5 million vehicles compared with its previous estimate of 13.5 to 14 million.