Hobbled by chip, other shortages, GM profit slides 40% in Q2
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(NewsNation) — General Motors’ second-quarter net income fell 40% from the previous year as computer chip and other parts shortages hobbled factory output and drove the company’s U.S. sales down more than 15%.
The Detroit automaker earned $1.67 billion from April through June, down from $2.79 billion in the same quarter last year, in part because it couldn’t deliver 95,000 vehicles due to missing parts.
The inventory crisis does not stop at GM, either: Car lots are still not at full capacity across the country, as the chip situation continues to plague supply. And now, the chip situation is cutting into profits, despite high prices.
It’s a fallout industry experts saw coming.
“They’ve got a lot of trucks that are sitting. They’ve built the trucks but they don’t have chips to put in them and they hope to have that happen by the end of the year,” Michelle Krebs, an executive analyst at Cox Automotive, said during a Tuesday appearance on NewsNation’s “Rush Hour.”
Washington has been working to tackle the chip shortage domestically. President Joe Biden hosted a roundtable Monday with manufacturers and labor leaders.
Tuesday, the Senate advanced the proposed $52 billion “Chips+” bill, which priposes to provide tax breaks for companies to pump up production in America.
Senate Majority Leader Chuck Schumer (D-N.Y.) called the crisis “one of the most important struggles of this century,” before the Senate’s 64-32 vote Saturday.
“The 21st century will be won or lost on the battleground of technological innovation,” he said.
With the Chips Act still in flux, construction of a new $20 billion intel plant in Ohio is facing delays. In the short term, car consumers are advised to be flexible, research thoroughly and hope for some luck.
“I heard a story this weekend of someone getting exactly what they wanted because they happened to be there when the truck came into the dealership. But that’s a stroke of good luck,” Krebs said.
After clearing the Senate, the “Chips+” act will now move on to the House for consideration.
According to Forbes, the average waitime for a new car is between one and three months.
