The refusal caught GM and its competitors off guard, and they paid the price. Car manufacturers slashed computer chip orders early last year, and electronics manufacturers, which had strong sales during the pandemic, happily picked up the excess supply. But when car sales bounced back, it left the industry struggling with a shortage of chips.
GM on Tuesday announced the extension of a week-long strike at three North American plants. The shutdown was due this week due to the shortage of chips, but GM says it will last until at least mid-March.
GM announced in its quarterly revenue report on Wednesday that the chip shortage could reduce $ 1.5 billion to $ 2 billion of its 2021 earnings, although it will produce the best-selling, most profitable vehicles, such as pickups and full-size SUVs. maintain.
Shares of GM (GM) previously traded at more than 5% after the cost of the chip shortage was announced. Shares have risen 10% since January 29, when the company announced it hopes to sell only emission-free vehicles by 2035.
But the company’s leadership included a earnings range that suggested earnings for 2021 would decline from 2020. And earnings before special items, such as interest and taxes, are expected to be less than Wall Street predicted.
Last week, GM made a rival Ford (F) said production of its first quarter would decrease by between 10% and 20% due to scarcity of chips. If it extends into the second quarter, it could cost the company between $ 20 billion and $ 2.5 billion.
GM also reported stronger-than-expected fourth-quarter earnings on Wednesday, which helped its full-year 2020 earnings beat 2019 earnings – despite the pandemic.
The country’s largest carmaker earned $ 2.8 billion in the quarter, excluding special items. It also surpassed Wall Street’s forecasts of $ 2.6 billion. Quarterly revenue rose 22% to $ 37.5 billion, which also beat expectations.
In 2020, the company earned a total of $ 7.1 billion, excluding special items, compared to $ 6.9 billion in 2019, when a six-week strike cost $ 2.9 billion.
The special levies in 2020 included an amount of $ 1.2 billion for the repair of airbags made by Takata and an increase in the value of its investment PSA Group, which merged with rival Fiat Chrysler, as well as a profit on his investment in Lordstown Motors, which plans. to use a former GM factory to build electric trucks.
GM ended the year with an increase in the fourth quarter in China and the United States, its two largest markets, and world sales rose 4% during the period. This reduced annual sales by 11% compared to last year, to 6.8 million. Like GM, most major automakers have also reported a decline in sales.
