General Motors Corp. executives on July 1 said lasting supply chain problems will ding its second-quarter sales because it is sitting on about 95,000 vehicles that still need parts, primarily semiconductors.
Most of those unfinished vehicles were built in June, GM said in a filing with the U.S. Securities and Exchange Commission. Not being able to ship many of them to dealers—which marks the point at which the company recognizes a sale—means sales for the second quarter were down about 15% from the prior-year period at roughly 582,000. Despite that, the GM team said it expects the excess inventory to be sold by year-end and reiterated its full-year forecasts for profits (between $9.6 billion and $11.2 billion) and free cash flow ($7 billion to $9 billion).
“We appreciate the patience and loyalty of our dealers and customers as we strive to meet significant pent-up demand for our products, and we will work with our suppliers and manufacturing and logistics teams to deliver all the units held at our plants as quickly as possible,” Steve Carlisle, president of GM’s North American operations, said in a statement.
The sales warning and its citing of semiconductor shortage looks set to test GM CEO Mary Barra’s optimism of recent months that the chip shortage will ease significantly in the second half of 2022 and let GM grow wholesale volumes by 25% to 30%. The Detroit-based auto titan isn’t the only company to have talked about needing to park mostly-manufactured vehicles missing key parts: Daimler Truck Holding AG’s Martin Daum recently detailed his team’s ongoing challenges, which have led to some 10,000 unfinished trucks awaiting key parts.
Shares of GM (Ticker: GM) were briefly halted early on July 1. By mid-morning, they were changing hands at about $32.30, up 1.6% from their June 30 close. Year to date, they have lost nearly half of their value, cutting the company’s market capitalization to about $47 billion.
