By TOM KRISHER, AP News.
DETROIT (AP) — Despite a computer chip shortage that temporarily closed some of its factories, General Motors made a healthy $2.8 billion net profit in the second quarter.
The earnings came even though GM plants cranked out 200,000 fewer vehicles than they did during the same quarter in 2019, the last comparable quarter before the coronavirus pandemic.
The automaker told the same story as competitors Ford, Stellantis, and others, saying that high prices and strong demand for expensive pickup trucks and luxury SUVs overcame inventory shortages.
The average GM vehicle sold for over $48,000 from April through June, up more than $5,200 from a year earlier, according to Edmunds.com.
Excluding one-time items, GM made $1.97 per share, beating Wall Street estimates of $1.82. Revenue was $34.2 billion, which also exceeded analysts’ estimates of $29.92 billion, according to FactSet.
The profit eclipsed the same quarter in 2020, when GM lost $806 million as plants closed and sales slumped at the start of the coronavirus pandemic.
GM also raised its net income guidance for the full year to $7.7 billion and $9.2 billion, and pretax earnings of $11.5 billion to $13.5 billion. It had been $10 billion to $11 billion.
GM shares fell 3.4% in trading before Wednesday’s opening bell, to $55.90.
From April to June two years ago, GM factories produced more than 785,000 vehicles, according to the LMC Automotive consulting firm. But LMC estimated that fell 38% to 569,664 last quarter as GM ran short of semiconductors and had a herky-jerky production schedule with plants shut down on and off through the quarter.
Just Tuesday, GM announced that pickup truck plants in Flint, Michigan, Silao, Mexico, and Fort Wayne, Indiana, would be closed next week due to the chip shortage. Production is to resume on Aug. 16. But factories in Tennessee and Mexico that make cars and SUVs that were down since July 19 will come back on line Monday.
Fort Worth-based General Motors Financial Company Inc. announced net income of $1.2 billion for the quarter ended June 30, 2021, compared to $878 million for the quarter ended March 31, 2021, and $173 million for the quarter ended June 30, 2020. Net income for the six months ended June 30, 2021 was $2.1 billion, compared to $340 million for the six months ended June 30, 2020.
GM Financial was also mentioned in CEO Mary Barra’s letter to shareholders related to Cruise, a majority-owned autonomous vehicle subsidiary that has unveiled a driverless shuttle called the Origin.
In discussing the company’s fully driverless commercial service named Cruise, Barra said that “Recently, through GM Financial, we extended Cruise a $5-billion line of credit to further advance its commercial ramp of the Origin, which is being built at Factory ZERO in Detroit-Hamtramck and launches in early 2023.”
Retail loan originations were $9.1 billion for the quarter ended June 30, 2021, compared to $8.2 billion for the quarter ended March 31, 2021, and $8.7 billion for the quarter ended June 30, 2020. Retail loan originations for the six months ended June 30, 2021 were $17.4 billion, compared to $15.2 billion for the six months ended June 30, 2020. The outstanding balance of retail finance receivables, net of fees was $56.4 billion at June 30, 2021, compared to $51.3 billion at December 31, 2020 and $46.5 billion at June 30, 2020.
Operating lease originations were $5.9 billion for the quarter ended June 30, 2021, compared to $5.8 billion for the quarter ended March 31, 2021, and $3.2 billion for the quarter ended June 30, 2020. Operating lease originations for the six months ended June 30, 2021 were $11.6 billion, compared to $8.2 billion for the six months ended June 30, 2020. Leased vehicles, net was $40.6 billion at June 30, 2021, compared to $39.8 billion at December 31, 2020, and $39.6 billion at June 30, 2020.
The outstanding balance of commercial finance receivables, net of fees was $5.7 billion at June 30, 2021, compared to $9.1 billion at December 31, 2020 and $7.9 billion at June 30, 2020.
Retail finance receivables 31-60 days delinquent were 1.5% of the portfolio at June 30, 2021 and 2.2% at June 30, 2020. Accounts more than 60 days delinquent were 0.5% of the portfolio at June 30, 2021 and 1.3% at June 30, 2020.
Annualized net charge-offs were 0.4% of average retail finance receivables for the quarter ended June 30, 2021 and 1.5% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, annualized net charge-offs were 0.6%, compared to 1.6% for the six months ended June 30, 2020.
The company had total available liquidity of $29 billion at June 30, 2021, consisting of $4.4 billion of cash and cash equivalents, $21.1 billion of borrowing capacity on unpledged eligible assets, $0.5 billion of borrowing capacity on committed unsecured lines of credit, $1 billion of borrowing capacity on the Junior Subordinated Revolving Credit Facility from GM, and $2 billion of borrowing capacity on the GM Revolving 364-Day Credit Facility.
Earnings resulting from the Company’s equity investment in joint ventures that conduct automotive finance operations in China were $50 million for the quarter ended June 30, 2021, compared to $54 million for the quarter ended March 31, 2021 and $42 million for the quarter ended June 30, 2020. Earnings for the six months ended June 30, 2021 were $104 million, compared to $67 million for the six months ended June 30, 2020.
- Additional reporting by FWBP Staff