GM Warns of Tough Third Quarter, Bigger Impact on Production Due to Chip Shortage


General Motors predicts a tough third quarter and warned Wall Street on Friday that its vehicle sales and production volumes would take a bigger hit than expected in the second half.

GM Chief Financial Officer Paul Jacobson told analysts at an RBC Capital Markets conference that due to the current global shortage of semiconductor chips, the automaker’s vehicle sales and production in the second half-year would be down 200,000 units, mainly in the third quarter.

When GM announced its second quarter results last month, it told investors that its second half North American wholesale volumes would be down about 100,000 units from the first half when GM delivered 1 , 1 million vehicles.

GM said the biggest hit is due to worsening supply constraints on semiconductor chips from Southeast Asia.

“The global supply chain continues to deteriorate a bit,” said Jacobson. “We have multiple impacts that have mainly compounded the risk of the semiconductor supply chain. As you know, stocks have been very, very thin all year. And that’s going to give us a little bit of risk. throughout the year.”

He said the impact of the COVID pandemic in Southeast Asia has increased production restrictions.

“But it’s a different situation than it really was at the start of the year,” Jacobson said. is really sort of in the background processing facilities that are in Southeast Asia. ”

The news comes a day after GM extended the shutdown of several factories in North America due to the global chip shortage.

For example, Lansing Grand River Assembly will be idling through September 27. The plant produced part of the production of the Cadillac Blackwing and Chevrolet Camaro sports cars. Lansing Delta Township, which was scheduled to restart on September 20, will remain inactive until September 27. GM manufactures the mid-size Chevrolet Traverse and Buick Enclave SUVs at the plant, which has been out of order since July 19.

Also at idle through Sept. 27: Wentzville Assembly in Missouri, where GM makes mid-size Chevrolet Colorado and GMC Canyon pickups and full-size Chevrolet Express and GMC Savana minivans. It went down for the first time this week.

Chips are used in a variety of vehicle parts as well as in personal electronics. Demand for chips increased during the pandemic as more workers and children stayed home for work and school and needed laptops and other devices.

Still, GM has maintained profits despite production interruptions and having to build vehicles just below all the parts, then store the cars in various parking lots across the country while waiting for chips to arrive to complete the process. assembly and ship them to showrooms.

General Motors trucks sit in a closed parking lot next to the Economy Lot across from Bishop International Airport in Flint on August 11, 2021.

In the second quarter, GM reported net profit of $ 2.8 billion, up from a net loss of $ 738 million a year ago at the height of the pandemic. GM’s earnings come largely from high-priced pickup trucks and large SUVs that continue to roll off the assembly lines.

“GM has been nimble and decisive in managing the impacts of COVID on our production and wholesale volumes, and we continue to believe that we will be within our profit guidance range for the calendar year, even though the third quarter will be difficult, ”said GM spokesman David. Caldwell in a statement Friday. “Despite all the volatility we have experienced this year, our forecast for the calendar year is still higher than our original forecast for 2021.”

GM said it expects its adjusted profit before interest and taxes (EBIT) to be $ 11.5 billion to $ 13.5 billion for the year, up from previous 10-11 forecast. billions of dollars.

Following:GM Temporarily Halts Orion Assembly Amid Massive Chevy Bolt Recall

Following:GM changes direction to improve operations in South America

Contact Jamie L. LaReau at 313-222-2149 or [email protected]. Follow her on Twitter @jlareauan. Read more on General Motors and subscribe to our automotive newsletter. Become a subscriber.

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