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GM 3Q profit falls 40% to $2.4B as chip shortage dings sales

🕐 3 min read

by AP News.

DETROIT (AP) — High prices for trucks and SUVs helped General Motors post a $2.4 billion third-quarter profit despite factory closures due to a shortage of computer chips and other parts.

But the profit was 40% lower than the $4 billion GM made during the same period last year as sales slumped and the company lost market share in the U.S., its most profitable country.

Excluding one-time items, the company made $1.52 per share, beating Wall Street estimates of 98 cents.

Revenue for the quarter fell 25% to $26.78 billion, far short of Wall Street estimates of $30.72 billion, according to FactSet.

“The quarter was challenging due to continuing semiconductor pressures,” CEO Mary Barra wrote in a letter to shareholders that pointed to the company’s future of zero-emission electric vehicles.

The quarter included a . But it also includes very strong results from GM Financial, the recall cost settlement we reached with our valued and respected supplier and JV partner LG Electronics, and $0.3 billion in equity income from our joint ventures in China.

The company increased its full-year net income guidance to a range of $8.1 billion to $9.6 billion. In the second quarter it had been $7.7 billion to $9.2 billion.

GM was forced to temporarily close many of its factories from July through September due to the global chip and parts shortages that have plagued the auto industry all year.

The profit came even though GM’s third quarter sales in the U.S., its most profitable market, were almost 33% lower than a year ago. The company lost 3.8 percentage points of U.S. market share, according to the Edmunds.com website.

But consumer willingness to pay high prices for scarce new vehicles kept the money flowing for GM. The average sale price paid for a GM vehicle topped $50,000 for the quarter, up more than 16% from a year ago, Edmunds said.

“The ongoing disruption to supply chains created by the chip shortage has been particularly harsh to GM, which appeared to struggle with the biggest declines in sales and market share compared to its Detroit Three counterparts in Q3,” said Ivan Drury, Edmunds’ senior manager of insights.

Fort Worth-based General Motors Financial Company Inc., the wholly owned captive finance subsidiary of General Motors Company, announced net income of $822 million for the quarter ended Sept. 30, 2021, compared to $1.2 billion for the quarter ended June 30, 2021, and $893 million for the quarter ended Sept. 30, 2020. Net income for the nine months ended Sept. 30, 2021 was $2.9 billion, compared to $1.2 billion for the nine months ended Sept. 30, 2020.

Retail loan originations were $7.8 billion for the quarter, compared to $9.1 billion for the quarter ended June 30, 2021, and $7.3 billion for the quarter a year earlier. Retail loan originations for the nine months ended Sept. 30, 2021 were $25.2 billion, compared to $22.5 billion for the nine months ended Sept. 30, 2020. The outstanding balance of retail finance receivables, net of fees was $57.4 billion at September 30, 2021, compared to $51.3 billion at December 31, 2020 and $48.7 billion at September 30, 2020.

GM Financial had total available liquidity of $29.5 billion at September 30, 2021, consisting of $4.9 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.

Shares of GM fell 1.6% to $56.47 in trading before Wednesday’s opening bell, and Ford fell as well. – FWBP Staff contributed to this report

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