Shares of General Motors Co fell as much as 4.7 percent on Thursday as investor concerns over weak pricing at the No. 1 U.S. automaker outweighed a giant leap in quarterly net profit.

GM's first-quarter net profit more than tripled from a year ago and operating profit narrowly beat expectations, driven by a recovery in the U.S. market and strong sales in Asia.

Even though total sales rose 15 percent to $36.2 billion against Wall Street's estimate for $35.6 billion, analysts said that increase was lost to aggressive incentives early in the year.

Worth noting that GM's pricing did not surprise on the upside as Ford's did, J.P. Morgan analyst Himanshu Patel said in a research note, referring to the first quarter. GM's March to April incentive decline was not as steep as Ford's, suggesting Ford benefited more than GM.

Prices for GM's cars and trucks fell in North America and stayed flat in its Europe and international operations, which mostly consist of GM's largest auto sales market, China. Prices rose in South America.

The adjusted operating profit in GM's international operations fell by one-third from the year earlier.

Chief Financial Officer Dan Ammann said that GM recently announced a price increase on most of its vehicle lineup that went into effect earlier this week. Continued price increases may come as the year goes on, Ammann said.

From our point of view, it's a solid quarter. It's good progress. It sets up a good foundation for the balance of the year, Ammann said.

But GM's gains from vehicle pricing were weaker than those of its rival Ford Motor Co, analysts said.

It's great that they beat consensus after adjusting for special charges, but it's troubling to see them not get any help ... from pricing, said Morningstar analyst David Whiston. That's quite a contrast from Ford, which is getting improvements from both volume and pricing. GM's only getting help from volume right now.

GM shares were down 2.5 percent at $32.21 at midday on Thursday after dropping to $31.50 earlier in the session.

The U.S. automaker said it expects full-year adjusted earnings before interest and taxes to show solid improvement from 2010 helped by better pricing and lower fixed costs in North America.

GM's results follow those of rival Ford Motor Co, which last week posted its best first-quarter profit in 13 years as higher prices for redesigned vehicles offset pressure from spiking commodity and oil prices.

Strong profits at Ford and GM in the past year are expected to be a major factor in upcoming negotiations with the United Auto Workers union. Both companies are in much better financial position than the last time talks were held in 2007.

However, GM Chief Executive Daniel Akerson said the UAW understands GM's cost structure needs to remain on par with its rivals, including Japanese automakers with U.S. plants.

COMMODITY COSTS RISING

Ammann said GM expects commodity costs to put pressure on earnings for the rest of the year, but the company hopes to offset to the maximum extent possible with improving prices for its vehicles and savings from suppliers.

However, GM was heavily criticized by Wall Street analysts for its lofty U.S. incentives in January and February that helped boost sales but cut into profits. GM trimmed incentives in March and April.

Ammann said GM's U.S. incentives are currently running slightly below the industry average and that they will remain there for the remainder of 2011.

GM filed for bankruptcy in 2009 after being hit by the housing downturn and a spike in gasoline prices the year before that caused consumers to turn away from its high-profit trucks. In 2009, the company was saved by a $52 billion bailout funded by U.S. taxpayers.

Last November, GM sold stock in an initial public offering at $33 per share and the U.S. government still owns 32 percent of common stock.

In addition to strength in China, GM's sales in its home North American market are growing. GM's April U.S. sales rose 26 percent and it retook the top spot it lost to Ford the prior month.

GM's sales in China for the quarter were 686,000 vehicles, some 2,000 more than in North America.

GM's net income in the first quarter rose to $3.2 billion, or $1.77 a share, compared with $900 million, or 55 cents a share, in the year-earlier quarter. It was GM's fifth consecutive quarterly profit.

Excluding such one-time items as sales of stakes in parts maker Delphi and Ally Financial, it earned 95 cents a share. That was 4 cents better than what analysts polled by Thomson Reuters I/B/E/S had expected.

Ammann said GM is set up well to profit from higher gasoline prices with a much more diversified portfolio than three years ago when gas prices last topped $4 per gallon.

We had a very high, robust April, 19.8 percent market share in April with the lowest incentives we've had as the new company, he told reporters.

TRUCK PRODUCTION MAY FALL

However, Amman said GM could cut truck production if the recent shift toward smaller, more fuel-efficient cars continues. This is a concern of analysts because trucks and big SUVs are more profitable for automakers.

GM's North American operations posted adjusted earnings in the quarter before interest and taxes of $1.3 billion, up $100 million from last year.

It expects North American results to improve on average for the rest of the year.

GM's European unit broke even on an adjusted earnings before interest and taxes basis and is targeting break-even before restructuring charges for the entire year.

GM's liquidity at the end of the quarter rose to $36.5 billion after the sales of the Delphi and Ally stakes. Cash and marketing securities grew to $30.6 billion from $27.6 billion at the end of the fourth quarter.

The automaker reaffirmed it expects no material impact on full-year results from the March 11 earthquake and tsunami in Japan, but Ammann was not specific in detailing how GM would react to the shortage of Japanese-made vehicles in the coming months.

(Additional reporting by Deepa Seetharaman and Nick Carey in Detroit; Editing by Derek Caney, Dave Zimmerman and Matthew Lewis)

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