General Motors sales up 40% in the second quarter, but below estimates

General Motors reported strong growth in its vehicle shipments in the second quarter, but numbers were slightly below forecasts. Investors see the industry’s rapid recovery from the pandemic, but one major challenge remains.

General Motors (GM), the No. 1 automaker in the United States, on Thursday reported strong growth in its second-quarter shipments, up 39.7% to 688,236 units cumulatively.

General Motors, like many other manufacturers, saw a surge in auto sales from April to June amid pent-up consumer demand following the coronavirus pandemic and the recovery in the auto industry.

However, research firms Edmunds and Cox Automotive had higher expectations for GM sales, targeting 40% to 43% growth.

In its delivery report, General Motors noted:

  • deliveries of GMC brand vehicles increased 50%, posting the best second quarter and the best first half since 2005.

This growth was driven primarily by a 38% and 46% increase in sales of the Sierra LD and HD models, respectively, and a 126% cumulative increase in sales for the new large SUVs Yukon and Yukon XL.

  • Chevrolet Bolt EV deliveries were record-breaking;

  • Cadillac sales increase 55%;

  • Buick’s premium SUVs posted 86% overall sales growth, leading to its best quarter in more than 15 years.

For the quarter, GM said it had a 40.6% share of the retail market for full-size pickup trucks, up 4.5% on a year-over-year basis, leading the industry for the seventh straight year.

  • General Motors said it expects strong demand for its vehicles to continue in the second half of this year and into 2022.

At the same time, GM’s chief economist Elaine Backberg noted that consumer demand for cars is constrained by very scarce inventories. At the end of the second quarter, GM had 211,974 vehicles in stock, which is 37% less than at the end of the first quarter, while, for context, it is worth noting that the automaker’s inventory at the end of 2019 was about 616,000 units. The reason is the limited supply of spare parts, namely microcircuits.

Curt McNeill, GM US vice president of sales, said: “While the situation remains volatile, we are focused on continuing to use all available semiconductors to create and supply our most sought after products.” previously wrote that the global shortage of microcircuits could last until 2023.

Analytics of car stocks

Overall, analysts estimate that automakers sold about 4.5 million vehicles in the US in the second quarter, up 52–53% from the second quarter of 2020.

Strong quarterly sales results were achieved by: Hyundai Motor (up 69% yoy but below estimates), Toyota Motor (up 73% but below estimates), Nissan Motor (up 68%), Porsche (up 55.5 %).

GM rivals Ford (F) and Tesla (TSLA) will release their sales figures today.

In the second half of 2021, consumers will have more choice among electric vehicles as models such as the Chevrolet Bolt EUV, Hyundai Ioniq 5 and Kia EV6 come out. An electric version of Ford’s best-selling F-150 pickup truck is due out in 2022.

Investors should be aware that the global semiconductor shortage could continue to stifle auto production over the next 12 months. At the same time, small inventories lead to an increase in prices in the industry – the latest data in the United States showed that one of the main reasons for the jump in inflation in the country was precisely the rise in prices for cars (new and used).

While consumer spending remains high and unemployment is declining, some analysts believe that global auto sales will continue to slow in the second half of 2021.

Deutsche Bank analyst Emmanuel Rosner expects global auto retail sales to hit 15.7 million vehicles in June, up from 17.1 million vehicles in May and 18.6 million vehicles in April.

GM shares are up 42% and 137% since early 2021 and over the past 12 months, respectively. General Motors shares have lost 1% in the past month, also responding with a slight non-trading decline to Thursday’s supply report.

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