General Motors' Income Tumbles 40% on China Loss, Parts Shortages - WSJ
S E E D E D C O N T E N T
General Motors second-quarter net income fell 40% over the prior year, hurt by a loss in China and supply-chain troubles that left the auto maker with tens of thousands of partially built vehicles it couldn't sell during the period.
The Detroit-based car company on Tuesday said net income for the April-to-June period totaled $1.69 billion, down from $2.84 billion a year earlier.
GM said second-quarter revenue rose about 5%, to $35.76 billion. It posted pretax earnings per share of $1.14, below the average analyst estimate of $1.23, according to FactSet.
GM warned earlier this month that a drop in vehicle output in North America would hit second-quarter results. A shortage of computer chips and other parts prevented the company from shipping 95,000 vehicles to dealers, GM said, though it expects to clear the backlog during the second half of the year.
The auto maker on Tuesday stood by its forecast for the full year of $9.6 billion to $11.2 billion in net profit. GM shares fell about 1% in premarket trading.
Pressure surfaced in other parts of GM’s business too, including in China, the company’s second-largest market, where its joint-venture business posted a rare loss of $87 million. The pretax profit margin in North America, which drives the bulk of GM’s bottom line, fell to 8%, from 10.4% a year earlier.
Chief Executive Mary Barra said the company is cutting discretionary spending and limiting hiring, and is prepared to tighten costs even further if economic conditions worsen.
Ms. Barra said the outlook for the second half of the year is strong, and she expects production to increase sharply from the first half.
Across town, Ford is preparing to cut several thousand salaried jobs in North America to improve its cost structure as it prepares for a long-term transition to electric vehicles.
Separately, GM said it struck agreements with outside suppliers to secure raw materials needed to build electric-vehicle batteries. The pacts will help the company lock up enough battery capacity to hit its goal of one million electric vehicles in North America by 2025, GM said.
South Korea’s LG Chem agreed to supply GM with nearly one million tons of material that go into battery cathodes, a key component in EV batteries, the auto maker said. Cathodes use lithium, nickel and other materials that account for about 40% of the total cost of a battery, GM said.
GM also said it signed a deal with Philadelphia-based Livent Corp. for lithium hydroxide, which is another ingredient used in battery cathodes. The agreement calls for supply of the material to shift from Livent’s operation in South America to U.S.-based production facilities later in the decade.
GM and other auto makers have been taking pains to disclose more to Wall Street about how they plan to put the industrial pieces in place to mass produce electric cars. Investor enthusiasm for EV-related stocks soared last year amid signs that battery-powered vehicles are poised for strong growth. Since then, shares in EV makers have pulled back sharply, in part because of missed production forecasts.
Ford last week outlined several steps it is taking to boost production of batteries and electric models, including an agreement to source iron-based batteries from China’s Contemporary Amperex Technology Co.
Ford reports second-quarter results Wednesday, followed by global auto maker Stellantis NV, which plans to release its latest earnings report early Thursday.
Analysts have raised questions about whether a future battery shortage could curb the auto industry’s EV ambitions. Both GM and Ford have said they aim to overtake Tesla Inc. in U.S. electric-vehicle sales.
Meanwhile, traditional car companies face a host of challenges in their core business of building internal-combustion-engine cars, which still fuel nearly all of their profits.
Rising interest rates could dampen consumer demand, while higher raw-material costs are eroding profits and leading car companies to raise vehicle prices. The computer-chip shortage continues to scramble auto makers’ production schedules, complicating efforts to replenish depleted dealership lots.
With inventory levels near all time lows, the average price paid for a new vehicle in the U.S. hit a record of about $45,800 in June , nearly 15% higher than a year earlier.
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Three things we learn here:
1) America needs to regain control of strategic resources and production.
2) A car has now become a true luxury item.
3) We are a long, long way from electric cars becoming the norm.
We are decades away from that at best. The infrastructure requirements alone are massive. Most greenies don’t have clue but boy .... are they proud of themselves when they put on the fake handcuffs.
The greenies are like a woman I knew long ago......they want it now!
Toxic
Toxic whores!
I wouldn’t go that far but then again I don’t know who you are talking about.
You are a lucky guy!
GM just secured enough cathode material for 5 million electric vehicles
A supply of CAM starting later this year!
That's a start.
and going on until 2030, that's a hell of a lot more than a start. You don't have a battery without CAM.
There is a lot more good news in the article than just the CAM.
How much will they cost?
and
How long will it take to fully charge one?
That's a good research project for you, Vic. Let us know the answer when you find out.
So you are all done googling for today?
Have a good one.
Actually, some of the information re CAM was in your article, mine added some other good news.
You should goggle more, it would improve your accuracy and knowledge of the subject you present.
Cheers.
That's highly debatable.
Cheers.
All the best to you.
Not to those that can understand what they are reading.
Then let's pick up on what you left out:
"Across town, Ford is preparing to cut several thousand salaried jobs in North America to improve its cost structure as it prepares for a long-term transition to electric vehicles."
Do you still think it's good news?
I thought you said "cheers?"
That is correct, it will take much less labor to produce an EV than a typical gas engine, the result will be a smaller workforce.
Kind of like the horse and buggy era, advance or die as the old saying goes.
I did say Cheers, if you choose to be stuck in the 50s that's your choice.
I prefer American workers getting a living wage and cars being affordable, so I guess we disagree on what "advancement" looks like.
I did say Cheers,
Care for another encore?
Good to know that you support unions. Like every commodity, the price of cars has risen year after year as has housing and a million other articles.
Erich Merkle, Ford U.S. sales analyst, told the Free Press that customers placing orders for vehicles has helped with delivery flow. He spotlighted the major contrast between Ford's 1.8% sales growth versus the overall industry's 20.4% sales drop.
Seems that most auto manufacturers sold less cars in the 2nd quarter with the exception of Ford.
Cheers
Globalization has really taken a toll on American workers. We need to bar trade with nations that use cheap/slave labor
Like every commodity, the price of cars has risen year after year as has housing and a million other articles.
It need not be that way.
Seems that most auto manufacturers sold less cars in the 2nd quarter with the exception of Ford.
Broncos are popular in the US? Got it.
Cheers
Take care.....Again
Don't have a problem with that. But many countries labor is much cheaper than it is in the US but it is not slave labor.
Only if you want to be stuck in 1900.
And so are a number of their other vehicles, did you get that?
Cheers
China does have slave labor and that plus the cheap labor has been the killer of American jobs & manufacturing. What do we do now?
Only if you want to be stuck in 1900.
You don't think we can produce goods efficiently & at less cost? Have you noticed the way prices go down over time in technology?
And so are a number of their other vehicles, did you get that?
Ya, Ford is doing better that those on the bottom.
Cheers
Despedida
What do we do now, manufacturing has for decades gone to where there is cheap labor and the American people have supported it by buying the product in huge numbers. If, as you say you want living wages for Americans then the price of some products that would be manufactured in the US would be way overpriced for the American public.
Yes, it does, but the vast majority of products increase in price over the years. BTW, most electronics are built outside the US.
If you consider Toyota et al on the bottom, most people don't.
Cheers
Oh no Kavika, the American people like cheaper prices, but they in no way support it. It has been great for the coastal elite, but hurt everyone else. Trump showed us the way. Every international trade deal with the US should be based on goods produced at the same labor costs for both sides. No equal labor cost = no deal. It's that simple.
Yes, it does, but the vast majority of products increase in price over the years. BTW, most electronics are built outside the US.
Again, it need not be that way. American industrialists proved it long ago.
If you consider Toyota et al on the bottom, most people don't.
Your article only compared Ford to US companies
Cheers
auf Wiedersehen
If they don't support it why did they start and continue buying the product?
What in the world are you talking about, ''great for the coastal elite'' and hurt everyone else. That statement makes no sense at all.
Trump showed us the way, yes we know have tariffs on many products which adds to the price which adds to inflation.
Actually, it isn't that simple.
It compared Ford to the industry.
They are going to buy what's cheaper. Should the American manufacturing sector have been sacrificed for that? Since Bill Clinton let China into the WTO, this country has had it's center ripped apart.
What in the world are you talking about, ''great for the coastal elite'' and hurt everyone else.
You know what I'm talking about. The people who have benefitted from globalization. They don't care about the US.
Actually, it isn't that simple.
It must be.
Of course, they are going to buy what's cheaper. It actually started with Nixon and progressed from there.
That would be most every corporation in the US and a good portion of the US population.
No, actually it isn't.
This began with Japan a long time ago. I remember as a young lad in the late sixties my mom bought my brother and I skateboards. My dad, a WWII vet, was furious that they were made in Japan
We were discussing China but yes, Japan was first and when they started exporting cars to the US in the 1960s the American car manufacturers laughed at them. Americans were ready for a better-built, longer-lasting car since Detroit was turning out crap that had a 3 years life span. A better mouse trap will always sell.
If I remember correctly Toyota was the first Japanese auto manufacturer to enter the US market and look at them today.
Perfect .... how they doing on chips for already made and stored cars that don’t have them yet?
Per the article seems that in the 2nd half of 2022.
Ms Barra has presided over GM losing 40% of it's income and a long series of serious mistakes.
Let's call her an optimist.
Let's see how the 2nd half turns out.
I'll be right here.
Last time I checked GM alone had 100k+ vehicles stored and waiting for chips. I’ve seen the storage lots. All one needs to do is drive by a dealership to see how dire the situation is. Empty lots, few vehicles to sell for most new car dealerships.
So I hope for GM’s sake she is right but it seems counterintuitive to be hailing securing battery components for future vehicles to be built when parts are needed before one can sell the vehicles already built.
What a way to run a company.
The storage lots are crazy ..... parking lots and fields full of band new vehicles .... crazy
After a while they don't look or smell so brand new and we have a car shortage and rising prices for cars, which are already out of sight!
If I be a Wizard I’d turn them into Baby Formula to stock shelves throughout the USA.
Perhaps we can ask some of our resident Witches to do that for us.
If only there was baby formula to stock in Biden's America!
Abbott laboratories tried to warn them. Why did they shut down that plant?
China can whip up some melamine and water.
Another Biden blunder.