GM Submerged in Red Ink

Nesvold said the real driver in GM's losses is "the deteriorating outlook for autos and mortgages" in the U.S.

The domestic auto industry is grappling with a consumer spending slowdown amid soaring oil prices and an epic slump in the U.S. housing market that is resulting in a spike in mortgage defaults.

For years, GMAC was GM's main engine of profitability as its automotive operations struggled to contend with market share losses to low-cost, foreign-based competitors. The sale of GMAC to a private-equity firm was partly designed to free the business from GM's deteriorating credit ratings, but now the company is mired in losses from the mortgage mess.

On its top line, GM said its revenue for the third quarter fell 10% to $43.83 billion from last year's $48.89 billion. Automotive revenue rose 8.9% to $43.13 billion, beating analysts' expectation of $40.29 billion.

In North America, GM reported an adjusted loss from continuing operations of $247 million, down from last year's loss of $660 million. Net sales in the region slipped 0.7% to $26.61 billion.

Despite the improved performance, Morici said GM's losses in North America "were much larger than expected," which is why GM did not hit Wall Street's targets.

"These losses cannot merely be tagged to a tougher operating environment, and appear to transcend the gains made in the new UAW contract," Morici added. "All this raises questions as to whether GM's North American operations will become viable, or just less sick, with the new labor agreement."

Overseas, the automaker continued to flourish in emerging markets. Its global automotive operations swung to an adjusted profit for the period of $122 million from last year's loss of $455 million.

Adjusted profits doubled at GM Asia Pacific, while its sales climbed 42%.GM Latin America reported adjusted earnings up 86%, and its sales rose 35%. In Europe, the automaker's adjusted net loss widened to $90 million from $39 million, due to weakness in Germany, and sales rose 17%.

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