Detroit — Despite a shortage of computer chips that temporarily closed some factories, General Motors made a healthy net profit of $ 2.8 billion in the second quarter.
Despite the fact that the GM plant cranked out 200,000 fewer vehicles than it did during the same period in 2019, the last comparable quarter before the COVID-19 pandemic, it was profitable.
Automakers shared the same story with competitors such as Ford and Stellantis, saying that high-priced and expensive pickup trucks and strong demand for luxury SUVs overcame inventory shortages.
GM also raised its full-year net profit forecast to $ 7.7 billion and $ 9.2 billion, and pre-tax profit from $ 11.5 billion to $ 13.5 billion. That was between $ 10 billion and $ 11 billion.
GM executives said Wednesday that they expect tight inventories and high prices to continue throughout the year as chip shortages continue until 2022.
CEO Mary Barra warned that the rapidly spreading coronavirus delta mutant could cause future supply chain problems. However, she said GM manages the shortage by allocating rare chips to high-demand vehicles such as pickup trucks and large SUVs.
The company also plans to work with semiconductor manufacturers to address future shortages, she said.
“There’s still more variability than I want to see,” Barra said Wednesday. “This is a way we can solve it, and it doesn’t matter as we move forward over a slightly longer period of time.”
According to the company, the average selling price of GM cars was about $ 44,000 from April to June, about $ 3,000 higher than that in July.
Chief Financial Officer Paul Jacobson said the current high prices come from the high demand for high-priced trucks and SUVs with a “very rich combination” of options that consumers buy. I did. Mr. Rose said prices will drop slightly as inventories increase, but he expects prices to remain high as GM adds electric vehicles to its lineup.
Excluding temporary items, GM earned $ 1.97 per share, surpassing Wall Street’s estimate of $ 1.82. According to FactSet, revenue was $ 34.2 billion, above analysts’ estimates of $ 29.92 billion.
According to the company, profits would have been $ 1.3 billion higher without recall costs, including $ 800 million to solve the battery fire problem in older Chevrolet bolt electric vehicles.
Still, revenue was above the same quarter of 2020 when GM lost $ 806 million as the factory closed at the start of the pandemic and sales fell.
After Wednesday’s opening bell, GM shares fell more than 7% to $ 53.66. Jeffreys analyst Philippe Fushowa said in a note to investors that the company’s North American 10% rate of return was lower than analysts expected and full-year pre-tax guidance was lower than expected.
According to Rose, GM has over 200,000 inventories or enough vehicles to meet consumer demand for 25 days. It is well below normal inventory. Automakers want to supply dealer lots for about 60 days so that customers can choose.
On Tuesday, the Detroit Automobile Company and the United Auto Workers Task Force announced that factory workers would need to wear masks again because of the Delta variant. Asked if GM would require employees to be vaccinated, Rose hinted that it might come. “We value the multiple choices we can make, but our intention is to keep our employees and our customers safe,” she said. ..
Two years ago, from April to June, GM’s plant produced more than 785,000 vehicles, according to a consulting firm at LMC Automotive. However, LMC estimated a 38% drop in the previous quarter to 569,664 as GM ran out of semiconductors and had a jerky production schedule with factories shutting down and shutting down throughout the quarter.
Just Tuesday, GM announced that pickup truck plants in Flint, Michigan, Silao, Mexico and Fort Wayne, Indiana will be closed next week due to a lack of chips. Production is scheduled to resume on August 16. However, the Tennessee and Mexico factories that manufacture cars and SUVs that have been down since July 19 will return online on Monday.
Tom Chrischer
