GM second quarter sales drop 15% on production issues

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GM second quarter sales drop 15% on production issues

General Motors Co. said on Friday its second quarter sales fell 15% from a year ago because of supply and production problems, which led the auto maker to dial down quarterly sales and profit.

GM GM, told securities regulators on Friday that it expects to see lower profits and sales for the three months ended in June, as supply-chain snags and logistics continued, leaving the automaker with 95,000 unfinished vehicles built in June but waiting for chips and parts to be completed.

Joseph Spak, a RBC official said after the news that GM expects that most of these vehicles will be completed and sold to dealers by the end of 2022. GM views this issue mostly as a timing issue, which is disappointing. The stock of GM slid between gains and losses for most of Friday, and was up 0.7% recently, bucking a downdraft for the equity markets.

The S&P 500 index has lost about 46% this year, compared with losses of around 21% for the stock of GM. GM expects to report second-quarter profits between $1.6 billion and $1.9 billion, which is well below the FactSet consensus of $2.46 billion. In 2022, GM expects a profit of $9.6 billion to $11.2 billion.

The year now looks back-end loaded, and investors are trying to figure out if the mid-point or low-end of the range is more likely, Spak said. The analyst said that GM's guidance policy is to consider the mid-point base case.

In the second quarter, GM sold 582,401 vehicles in the U.S. It expects its market share to have grown 1 percentage point to 16.3%.

The company said that increased availability and pent-up demand boosted sales of some of its more storied vehicles, such as the Chevy Camaro.

The Wall Street Journal reported on Thursday that GM was making only about a dozen electric GMC Hummers a day at a renovated Detroit factory. The electric Hummer has a waitlist of about 77,000 orders.

In 2018, GM switched to reporting quarterly rather than monthly sales, taking a cue from Tesla Inc. TSLA, which always reported quarterly production and deliveries, its proxy for sales, by quarter.

Tesla is expected to report its quarterly numbers over the weekend. The investors worry that Tesla sales will get a hit from the Pandemic-related lockdowns in China, with April and May sales affecting the most.

Chinese EV makers Nio Inc. NIO, Li Auto Inc. LI, and XPeng Inc. reported big jumps in June deliveries, resembling the shutdowns earlier in the quarter.

Ford Motor Co. F is expected to report June monthly sales on Tuesday before the bell.