General Motors Co said Wednesday it expects first half profits will be “significantly better” than previously forecast, in part because of success shifting scarce semiconductors to boost production of highly profitable trucks in North America.
The Detroit automaker told investors in early May it expected first half earnings before interest and taxes would be “around $5.5-billion,” factoring out one-time gains and charges. For the full year, GM said it expected pretax profits “at the higher end” of a $10-billion to $11-billion range.
The company reported $4.4-billion in operating profit for the first quarter. The new guidance indicates second quarter pretax profits will exceed $1.1-billion.
GM shares rose more than 2 per cent in early New York trading after the announcement.
GM did not give a precise second quarter or full year forecast, beyond saying it was “optimistic” of hitting the full-year target.
The increased profit guidance, and moves announced Wednesday to boost shipments of pickup trucks, indicate that GM is achieving greater stability in acquiring chips and allocating them among its model lines, after months of scrambling to cope with supply chain disruptions.
The company has had to shut factories in North America and other regions for weeks at a time because of a global shortage of automotive semiconductors.
GM and its major rivals, including Ford Motor Co and Stellantis NV , have offset some of the costs of lost production by raising prices.
Demand for new vehicles, especially pickup trucks and SUVs, has remained strong in the United States and China, and tight inventories have allowed manufacturers and dealers to rein in the discount deals normally offered to keep sales up.
GM said Wednesday it expects to increase production of its heavy duty Chevrolet Silverado and GMC Sierra pickups by 1,000 vehicles per month, a result of efficiency gains engineered by workers at the Flint, Mich. factory that builds the vehicles. Heavy duty Silverado and Sierra trucks start at about $40,000 and can sell with options for more than a German luxury sedan.
In addition to the planned increase in production of large, heavy-duty pickups, GM said it expects shipments of mid-size Chevrolet Colorado and GMC Canyon pickups will increase by 30,000 vehicles during a period that began in mid-May through July 5.
The additional trucks will include vehicles that have been built but held at the Wentzville, Mo. factory because they were missing semiconductors. GM said “smaller volumes” of other vehicles that have been held back awaiting chips will also be shipped during June and July.
GM said it would cancel customary summer shutdowns at assembly plants that build its most in-demand models.
However, GM said production at other factories in North America, Asia and South America will be curtailed through June and July. During the second half, GM said it expects semiconductor supplies to recover, allowing for increased production and shipments of vehicles.
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