DETROIT -- General Motors Corp.'s profit soared 49 per cent in the second quarter, boosted largely by record results at its financial services arm. But even as the profit rose, GM's global and North American market share declined in the quarter, with the auto maker's European operations continuing to be a drag on the bottom line.

The world's largest auto maker said yesterday that it made $1.34-billion (U.S.) or $2.36 a share in the April-June quarter, up from $901-million or $1.58 a year ago. The Wall Street consensus for profit in the most recent quarter was $2.24 a share, according to a survey by Thomson First Call.

Revenue rose 7.1 per cent to $49.1-billion from $45.9-billion a year ago.

"Over all, our financial results for the quarter were reasonably good," said Rick Wagoner, GM's chairman and chief executive officer. "General Motors Acceptance Corp. once again had an outstanding quarter . . . and our automotive operations reported improved earnings as well."

GMAC made a record $860-million in the second quarter, up from $834-million in the year-ago period. GM's Detroit-area rival, Ford Motor Co., said Tuesday that it made $1.2-billion in the second quarter, a result that also was fuelled by the finance business.

Looking ahead, GM said it expects to earn between 75 cents and $1 a share in the third quarter. The current Wall Street estimate is 97 cents. The company maintained its 2004 profit estimate of approximately $7 a share. Wall Street's current estimate is $7.12.

In a research note, Merrill Lynch analyst John Casesa said GM's stance on the second half of 2004 is "appropriately cautious," given that pricing competition is expected to remain intense.

But he said the auto maker's "fundamentals are improving steadily in the face of an increasingly competitive environment."

Worldwide, GM's automotive profit totalled $529-million in the most recent period, up from $140-million a year ago, reflecting improved results in North America, Asia-Pacific and the Latin America/Africa/Middle East regions.

But the loss widened in Europe, a trouble spot for the company in recent quarters. In the second quarter, GM reported a loss of $45-million, compared with a loss of $3-million a year ago. The most recent results reflect intense price competition, foreign exchange losses and restructuring costs for GM's share of a joint venture with Fiat.

GM in June announced a major overhaul of its European business, saying it would bring Adam Opel AG, Vauxhall Motors Ltd. and Saab Automobile AB under closer control by its European headquarters.

The company also said it hoped to increase efficiency by moving functions such as finance, engineering, manufacturing, sales and marketing into Europe-wide departments co-ordinated at GM Europe headquarters in Zurich.

In a conference call with analysts and automotive journalists, GM chief financial officer John Devine said GM's new European management team was off to a good start in terms of cutting costs and noted that the company's market share was up versus a year ago. "But we're still not cracking the code in terms of being profitable, and it suggests we have to do certainly more on the revenue side and a lot more on the cost side," he said.

To start the year, GM said it hoped the turnaround bid in Europe would result in a profit in 2004. It has since backed off that goal. The loss for the first half of the year amounted to $161-million.

"This is not acceptable," Mr. Devine said. "Obviously we have to dig deeper in Europe to get this in the black."

GM said its global market share fell to 14.7 per cent in the quarter from 14.9 per cent in the prior-year period.

GM North America made $328-million in the second quarter versus $83-million a year ago. Improvements in material costs and pricing more than offset a less favourable mix of vehicle sales and higher recall costs. GM said its North American market share was 26.2 in the quarter, down from 27.2 last year.

GM Asia Pacific earned $236-million in the quarter, up from $163-million a year ago. Mr. Devine said GM's market share in China was approaching 10 per cent, and the market continues to grow rapidly.