DETROIT – High prices for trucks and SUVs helped General Motors generate $ 2.4 billion in profits in the third quarter despite factory closures due to a shortage of computer chips and other parts.
But profits were 40% lower than the $ 4 billion GM made in the same period last year when sales plummeted and the company lost market share in the US, its most profitable country.
GM is giving away 40,000 PUSH ELECTRIC VEHICLE CHARGERS
Excluding one-time items, the company made $ 1.52 per share, beating Wall Street’s estimate of 98 cents.
Revenue for the quarter was down 25% to $ 26.78 billion, according to FactSet, well below Wall Street’s estimates of $ 30.72 billion.
In a conference call with reporters on Wednesday, CEO Mary Barra said global semiconductor shortages and COVID outbreaks in supplier factories hit the company in the third quarter. “It’s still a little volatile,” she said.
However, GM is seeing some improvement in the current quarter and expecting additional shipments in the first three months of 2022, she said. “We’ll see this improve, but we’ll see that impact through to next year,” said Barra.
GM ADDED OVERTIME IN 6 US PLANTS AS THE CHIP SITUATION IMPROVES
GM has announced that it will produce about 200,000 fewer vehicles in the second half of this year compared to the first half, with most of the impact occurring between July and September.
Barra said she’s spoken to the CEOs of most of the major chipmakers and the companies are working on strategies to make sure the bottlenecks don’t recur. “I think we’ll definitely see changes to make sure we have the right offer,” she said.
GM’s third quarter profit came despite US sales for the quarter being nearly 33% lower than a year ago. According to the Edmunds.com website, the company lost 3.8 percentage points of the US market.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“The ongoing supply chain disruption caused by the chip shortage has been particularly tough for GM, which appeared to be struggling with the largest declines in sales and market share compared to its Detroit Three counterparts in the third quarter,” said Ivan Drury, senior Edmunds Manager of Findings.
However, Barra said she expected GM’s market share to recover when factories return to normal production. “We sell everything we can. I wish we had more vehicles,” she said, pointing to a strong market share of pickups and SUVs. “We have been # 1 in sales in the US for years and I am confident that our line of products and some of the new products we have will be able to regain them as soon as we become available. “
Consumers’ willingness to pay high prices for scarce new cars kept the money flowing for GM. The average sales price paid for a GM vehicle exceeded $ 50,000 for the quarter, more than 16% more than a year ago, Edmunds said. Barra said once supply grows, she expects high prices to subside.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
Given the expected improvement in its chip offering, GM increased its profit forecast for the full year to $ 8.1 billion to $ 9.6 billion. In the second quarter it was $ 7.7 billion to $ 9.2 billion.
GM’s shares fell a little more than 4% to $ 55.03 on Wednesday’s opening bell. Shares in Crosstown rival Ford, which is reporting profits after the market closed, fell 2% to $ 15.63.