General Motors shares have soared after the company announced it would be more profitable and return more money to shareholders.

Shares in America’s biggest automaker rose more than 2% after it raised its 2016 earnings forecast by 25 cents to between $5.25 and $5.75 per share.

GM also plans to raise its stock buyback program by 80% to $9 billion and extend it to the end of 2017.

In total it plans to give $16 billion back to shareholders by the end of 2017.

Photo AP

GM executive Mary Barra said: “We made significant progress executing our strategic plan and the results are being demonstrated through our improved earnings.”

Shares in rival automaker Ford fell more than 3.5% after it said US margins could hit a plateau of 9.5%.

Ford said on January 12 it would give a special $1 billion dividend, and that it expects pre-tax profit of between $10 billion and $11 billion in 2015.

However, this figure was at the lower end of analyst expectations.