General Motors Corp. on Oct. 15 reported a $425 million third-quarter net profit on the strength of its financial arm, as its automotive unit continued to struggle with higher incentives and lower production, according to a Reuters report.

The earnings of 79 cents a share for GM compare with a net loss of $804 million, or $1.42 per share, in the third quarter of 2002 due to a write-down of its stake in the automotive business of Italy's Fiat, Reuters said.

Excluding its Hughes satellite unit, GM's operating profits fell 36 percent, to $448 million, or 80 cents a share. Analysts, on average, had forecast GM's earnings at 67 cents a share, according to Reuters Research, a unit of Reuters Group PLC.

GM raised its guidance for full-year earnings, saying it would exceed its original target of $5 a share excluding Hughes and special items, Reuters reported.

GM also said it had contributed $13.5 billion to its pension plans in September and October. It said its pension fund assets had a return of 14 percent through the third quarter, and that if those returns held for the rest of the year, the underfunding in GM's plans would "improve dramatically," according to Reuters.

GM once again made little on the sale of new cars and trucks but reported stronger-than-expected profits Oct. 15, due to another strong quarter of refinancing mortgages at its GMAC financial unit, according to the Detroit Free Press. GM was upbeat about the rest of the year, saying new-vehicle incentives tailed off last quarter and could be a sign of an improving economy.

GM raised slightly its full-year earnings projection. The third quarter, because of summer plant shutdowns for model changeovers, is

usually the slowest for automaker earnings. "I think the third quarter was stronger than any of us expected," said GM Chief Financial Officer

John Devine in a conference call. "It was another bang-up quarter for GMAC, led by the financing unit. The mortgage operations continue to be very profitable."

Last quarter and again this quarter, GM made more money refinancing and handling mortgages than selling new vehicles, according to the Free Press.

Without giving details, Devine said new-vehicle discounts in the United States slowed in the third quarter compared to the second quarter.

Sky-high incentives have eaten into the profits of all automakers, according to the Free Press -- especially GM, Ford Motor Co. and DaimlerChrysler AG's Chrysler Group, which use higher incentives than foreign rivals like Toyota.