Strong US demand for trucks and sports utility vehicles (SUV) boosted General Motors Co’s (GM) fourth-quarter profits and the company on Wednesday projected higher earnings despite up to a US$2 billion hit from the global semiconductor shortage.
The results capped a rollercoaster year for GM and other US automakers that were forced to shut down plants last spring due to the coronavirus pandemic, resulting in a massive hit to second-quarter sales.
However, GM saw a surprisingly hot market in the second half of the year.
Photo: Reuters
Carmakers now are dealing with another unexpected problem in the wake of COVID-19: a global shortage of semiconductor chips stemming in part from outsized demand for personal electronics during the pandemic.
GM said the semiconductor shortage would reduce operating profits by between US$1.5 billion and US$2 billion this year.
The company’s full-year forecast is still better than last year, and the supply crunch will not affect investments in electric autos or autonomous driving technology, executives said.
“The semiconductor shortage won’t slow our growth plans,” GM chief executive Mary Barra told reporters, adding that the automaker still expects a “very good” 2021.
GM reported fourth-quarter profits of US$2.8 billion, compared with a loss of US$194 million in the same period of 2019.
For all of last year, GM’s profits dropped 4.5 percent to US$6.4 billion and revenues fell 10.7 percent to US$122.5 billion.
Barra described the semiconductor situation as fluid and said the company was tweaking its production plans and would hold on to some mostly completed vehicles, not shipping them to dealers until semiconductors could be installed.
GM on Tuesday extended a shutdown of three plants at least through mid-March due to the shortage.
“We’re finding solutions every day,” the chief executive said. “So that’s why you see the range of impact — it’s still early days and there’s a lot of movement.”
Barra said GM expects to meet its full-year targets for production of critical pickup truck and SUV models, adding that it is prioritizing its most popular vehicles for completion.
“We see the situation resolving this year,” Barra said of the semiconductor crunch. “I think it’s a little too early to say precisely when it will end.”
Barra told analysts GM was pushing ahead with autonomous driving technology. She declined to put a timeframe on commercializing the venture, but said it is “not years away.”
She said the company intended to stay “aggressive” on electric auto technology, even though the market is still small in the US.
GM sees electric vehicles as a way to strengthen its market position in some parts of the US and also could target European markets, Barra said during a conference call with analysts.
The auto giant projected 2021 operating profits of US$10 to US$11 billion, compared with US$9.7 billion last year.
Adjusted profit per share will fall in a range of between US$4.50 and US$5.25 per share, GM said, below the US$5.89 projected by analysts.
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