General Motors Co posted a lower third-quarter profit on losses in Europe and offered a disappointing outlook that raised doubts about the speed of its turnaround two years after emerging from bankruptcy.

GM vowed to slash costs to shore up margins in a sputtering economy but its fourth-quarter outlook disappointed investors and sent shares tumbling 10 percent on Wednesday.

The 15 percent drop in third-quarter earnings and worries about slowing growth in key markets like Brazil prompted questions about whether the top U.S. automaker had taken its foot off the pedal after a 2009 taxpayer-funded restructuring wiped away its debt problems.

Chief Executive Dan Akerson called the third-quarter result solid but quickly added solid isn't good enough, an unusually stark assessment from a company long-criticized for moving too slowly to admit mistakes and force changes.

GM vowed to slash costs and simplify historically tangled operations, steps its closest rival Ford Motor Co has emphasized over the past five years under CEO Alan Mulally.

You just can't turn on a dime, said Mirko Mikelic, senior portfolio manager with Fifth Third Asset Management, who said GM's turnaround remained complicated by the U.S. Treasury's 27 percent ownership stake.

I don't think the U.S. government wanted to see them do a scorched-earth policy -- go into bankruptcy and radically change everything -- because that would have had an impact not only on GM but their suppliers, and that would have hurt the overall industry, he said.

The biggest drag on GM's third-quarter results came from Europe, where the automaker posted a $300 million loss. GM opted to keep the German Opel brand two years ago after saying it would sell the unit, but it has struggled to turn around its European operations since. On Monday, GM announced it would change its top executive in Europe.

The big story today is going to be what looks like a pretty disappointing fourth-quarter outlook, said Citi analyst Itay Michaeli, who has a buy rating on GM's shares.

GM backed away from its full-year target for Europe, saying it no longer expected to break even before restructuring costs. Akerson described Europe's economy as a morass. He also vowed more cuts in Brazil after reducing 4 percent of the automaker's jobs there.

We need to do a better job in Europe and South America. The results there are not sustainable and not acceptable, Akerson said.

Akerson, who became CEO just over a year ago, said the automaker needed to improve profit margins, which fell to 6 percent in the third quarter, from 6.7 percent a year earlier.

GM's third-quarter net income fell to $1.7 billion, or $1.03 a share, compared with $2 billion or $1.20 a share in the year-earlier period. Revenue rose 8 percent to $36.7 billion.

The contrast between GM and Ford was striking.

Ford last month posted third-quarter net earnings that were nearly as high as GM's, on revenue that was 10 percent lower. Ford, the only U.S. automaker to have avoided bankruptcy, ended the quarter with almost $13 billion in debt.

GM, which boasts that its taxpayer-funded restructuring left it with a fortress balance sheet, ended the quarter with less than $3 billion in long-term debt.

Profit in Asia fell 29 percent as growth in China slowed. Results in South America swung to a loss of $44 million as market share fell due to an aging lineup.

GM has the largest market share in China and sold its November 2010 IPO partly on the company's strength in China, raising concerns for investors if the largest global vehicle market slows.

Akerson said GM's China sales were outstripping industry-wide growth in the world's largest vehicle market and said he saw no interruption to gains there. China is a good story if it holds, he said.


Jefferies analyst Peter Nesvold said GM's outlook mirrored the increasing uncertainty on global growth.

To some degree, this feels a little symbolic with what we're seeing globally, said Nesvold, who has a hold rating on the stock.

GM emerged from bankruptcy in 2009 after a $52 billion taxpayer-funded bailout. The U.S. Treasury owns 32 percent of GM's common shares, and how it unwinds that stake remains an unanswered question.

As GM's share price has slipped well below last fall's $33 initial public offering price, Treasury officials have maintained they will not rush to sell the government's remaining stake.

Coming out of bankruptcy, Akerson and other executives said the company stripped out enough costs to make the business recession-proof so it could thrive even in a recessionary auto market.

On Wednesday, GM said it expects fourth-quarter adjusted earnings before interest and taxes to be similar to the same quarter last year.

J.P. Morgan analyst Himanshu Patel said that forecast implies fourth-quarter earnings in the low 30-cents-a-share range, far below the 86 cents analysts had been expecting.

Shares of GM were down 9.7 percent at $22.62 on Wednesday afternoon, not far from the day's low of $22.52. Its shares are down 42 percent from the 12-month high of $39.47 reached in January.

(Reporting by Ben Klayman, Deepa Seetharaman and Bernie Woodall in Detroit; Editing by Derek Caney and Matthew Lewis)