After reporting second quarter earnings that missed estimates, General Motors shares tumbled more than 9% on Wednesday. Amid soaring new vehicle prices, GM continues to contend with the large chip shortage and heightened production costs. However, according to Autoblog Editor-in Chief Greg Migliore, growth outlook could ring true, should it ring true, might put the company in a good position.
Vice Chairman of Yahoo Finance Live, Migliore again laid out an aggressive, I think, optimistic plan for growth. The Hummer model launch is a big deal for them, it's the return of the Hummer brand as an electric model and that's going to happen I believe in October.
Though GM's earnings may not have lived up to analysts' expectations, the OEM raised its full-year forecast in light of its healthy margins on pickup trucks and booming auto demand, expecting adjusted pre-tax earnings between $11.5 billion and $13.5 billion, up from its previous outlook of between $10 billion and $11 billion.
There was a strong demand for some of the pickup trucks and SUVs which are evidently quite lucrative, Migliore said regarding GM's past quarter. That helped them to overcome things like inventory issues and the chip shortage.
As for the other vehicle rollouts for GM on the horizon, Migliore pointed to the Cadillac Lyriq, another EV which should go up for sale beginning early 2022. GM is charging on the EV front, intending to invest $35 billion between 2020 and 2025 in autonomous vehicle manufacturing, exceeding its gas and diesel investment.
'So despite these challenges — recalls, the chip shortage, the pandemic — they are going to weigh down basically every car company, and I think Migliore is better positioned than most to try some new things and grow in the second half of the year here, said GM.
According to Migliore, the company is planning to sell 1 million EVs by 2025. However, he pointed to challenges such as the recent Chevy Bolt recall, issued due to a potential battery fire risk, as being one of several headwinds faced by GM in the near term.
GM must deal with its recall issues in addition to market conditions currently plaguing the entire auto industry.
'Like the Delta variant and as chip shortages, there are two very unpredictable things that could impact the business model and obviously, earnings, Migliore added. GM has a big third and fourth quarter in front of them.
He noted that there is still a lot of uncertainty within the space as GM heads into the fall and estimated that the chips shortage could drag on for at least another year.
'Now, GM has wide-ranging purchasing operation and they can get whatever they need, said Migliore. 'But with the chip stuff, we don't know what we don't know.
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