Pandemics and semiconductor chip shortages are both good and bad for business, automakers are finding. Both have caused production cuts, but the silver lining of leaner inventory is fewer incentives, higher average transaction prices, and strong first-quarter earnings.
General Motors reported net income of $3 billion and pretax adjusted earnings of $4.4 billion on $32.5 billion in revenue for the first three months of the year. GM still expects to earn $10 billion to $11 billion this year in adjusted pretax profits despite the chip shortage.
That is because GM is the sales leader in profitable full-size SUVs and is also moving a lot of full-size pickup trucks in North America—enough that it is pulling ahead plans to restart the Canadian plant in Oshawa, Ontario, in the fourth quarter—up from January 2022—to make full-size pickup trucks. The automaker is also experiencing record sales in China.
GM: We Won’t Overbuild
GM recognizes record profits are due in part to tight inventories. “We’ll never go back to pre-pandemic levels,” Barra says of past bloated inventories that required deals to move all that metal. The past year has forced the automaker and its dealers to home in on getting the right models to dealerships. But the company also needs to be responsive to customers who want to buy off the lot. The sweet spot is a bit more inventory than now, but significantly lower than in the past, Barra says. “We won’t overbuild.”
Meanwhile, the GM team under CEO Mary Barra has been moving quickly. The automaker has been pulling ahead product launches of the wave of new electric vehicles being developed in half the usual time, starting with the 2022 GMC Hummer EV electric pickup truck coming this fall, followed by the 2023 Cadillac Lyriq mid-size crossover in the first half of 2022.
Early Peek at the Electric Chevrolet Silverado Pickup
An electric Chevrolet Silverado full-size pickup truck for retail and fleet buyers is also in the works with a range of about 400 miles in certain configurations, Barra says. “The initial interest has been overwhelming, especially from commercial and government customers. We gave a small number of them a sneak peek at the interior and exterior designs. They said it exceeded their high expectations with zero emissions, long range, pickup capability, innovative storage, and strong value, along with a powerful design. What’s especially important is this truck will be a high-volume entry in one of the most popular and competitive segments in the industry.”
On the autonomous vehicle front, Cruise is now valued at more than $30 billion with GM owning a majority stake. Cruise is getting closer to commercialization as it continues its real-world driverless testing, Barra says. GM is already tooling up its Factory Zero plant in Detroit to make the Cruise Origin driverless ride-hailing vehicle. And an agreement was recently signed for Cruise to be the exclusive provider of self-driving taxis and ride-hailing services for the city of Dubai, with plans for 4,000 vehicles by 2030.
As for the semiconductor chip shortage, GM did not want to forecast the number of units of lost production, but GM had $1.2 billion in inventory awaiting components to get them out the door and recoup costs—the shortage could ultimately result in $1.5 billion to $2 billion in lost earnings. Key plants will work through the traditional summer shutdown to make up production shortfalls.
GM Highlights Strong Q1 Earnings and Upcoming Chevy Silverado EV appeared first on MotorTrend.By: Alisa Priddle
Title: GM Highlights Strong Q1 Earnings and Upcoming Chevy Silverado EV
Sourced From: www.motortrend.com/news/gm-earnings-cruise-silverado-electric/
Published Date: Wed, 05 May 2021 22:30:43 +0000
