DETROIT (AP) — High prices for trucks and SUVs helped General Motors post a $2.4 billion third-quarter profit, but the income was 40% lower than a year ago due to short supplies of new vehicles because of a global computer chip shortage.
The earnings fell from $4 billion last year sales as 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.
On a conference call with analysts, CEO Mary Barra said she is “pretty confident” that GM’s San Francisco-based Cruise autonomous vehicle subsidiary would be carrying passengers without human safety drivers sometime next year. To do that, Cruise still needs a final permit from California regulators.
Barra also told reporters Wednesday that the global shortage of semiconductors, plus COVID outbreaks at supplier factories, hit the company during the third quarter. “It still continues to be somewhat volatile,” she said.
However, GM is seeing some improvement in the current quarter and expects additional supplies in the first three months of 2022, she said. “We’ll see this improving, but we’ll see this impact into next year,” Barra said.
GM has said it expects to produce about 200,000 fewer vehicles in the second half of this year compared with the first half, with most of the impact occurring from July through September.
Fourth-quarter production should look more like the second quarter, which was stronger than the third, Chief Financial Officer Paul Jacobson said. But he said GM faces commodity price inflation and additional investments in new products and manufacturing.
Barra said she’s spoken with the CEOs of most major chip makers, and the companies are working on strategies to make sure the shortages don’t happen again. “I think we’ll definitely see changes to ensure we have the right supply,” she said.
GM’s third quarter profit came even though U.S. sales for the quarter 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.
“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.
But Barra said she expects GM’s market share to bounce back when factories get back to normal production. “We are selling everything we can. I wish we had more vehicles,” she said, pointing to strong pickup truck and SUV market share. “We’ve been for years the No. 1 sales leader in the United States, and I am confident with the product line we have and some of the new products coming that we’ll regain that as soon as we have the supply availability. ”
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. Barra said that once supplies grow, she expects the high prices to ease.
With the expected improvement in chip supplies, GM increased its full-year net income guidance to a range of $8.1 billion to $9.6 billion. In the second quarter it was $7.7 billion to $9.2 billion.
Shares of GM fell 5% to $54.52 late Wednesday morning. Shares of crosstown rival Ford, which reports earnings after the markets close, fell 1.4% to $15.72.