GM profit plunges in Q3 as chip shortage cuts inventories
Detroit — General Motors Co. made $2.4 billion in net income on revenue of about $26.8 billion in the third quarter this year, down 41% from last year's third quarter net income of $4.1 billion on revenue of $35.5 billion amid crunched vehicle inventories during the global chip shortage.
The Detroit automaker reported pre-tax profit of $2.9 billion in the third quarter, down from last year's $5.3 billion. GM now expects its full-year results will approach the high end of its guidance of $11.5 billion to $13.5 billion in pre-tax earnings. And earnings will no longer be affected by a major charge from the Chevrolet Bolt recall with battery supplier LG Electronics Inc. footing $1.9 billion of the estimated $2 billion bill.
"I am very proud of the team that has delivered these results and committed so strongly to our growth strategy," GM CEO Mary Barra said in a letter to shareholders Wednesday. "This includes our dealers and suppliers, who are critical to our success. Together, we are developing new technologies, incubating new businesses, delivering great products and services for our customers, and generating strong results that we can reinvest in our future."
On a call with media Wednesday, Barra said the global chip shortage remains "somewhat volatile." During the third quarter, the coronavirus delta variant affected chip production in Asian countries, cutting into auto production in North America.
"We are seeing some improvement in the fourth quarter," she said. "We expect to see some additional improvement in Q1, although we think the first half of next year we'll still see impact from the semiconductor shortage."
GM previously said no plants will be idled from the shortage as of Nov. 1. The automaker's production shutdowns from the shortage started in February.
The results come after GM reported a 33% year-over-year drop in third-quarter sales with the chip shortage curbing vehicle production and eating into valuable new-vehicle inventory on dealer lots. GM previously said its North American wholesale volumes, or dealer deliveries, in the second half of 2021 would be down about 200,000 units from the first half because of chip disruptions.
GM's net income margins in the third quarter were 9%.
Pre-tax earnings in GM North America totaled $2.1 billion. GM International's pre-tax earnings were $229 million.
Ford Motor Co. reports earnings after market close today. Stellantis NV reports revenues and shipments on Thursday.