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GM reports higher profits, sees limited hit from chip shortage

Despite global shortage of semiconductors, US automaker says investments in electric vehicles, autonomous driving technology will be unaffected

Updated 5 years ago · Published on 11 Feb 2021 9:30AM

GM reports higher profits, sees limited hit from chip shortage — GM’s fourth-quarter profits rose from losses a year ago, but profits for all of 2020 dropped 4.5% and revenues fell 10.7%. – Twitter pic, February 11, 2021

NEW YORK – Strong US demand for trucks and SUVs boosted General Motors’ fourth-quarter profits and the company yesterday projected higher earnings despite up to a US$2 billion (RM8.09 billion) hit from the global semiconductor shortage.

The results capped a rollercoaster year for GM and other US automakers that were forced to shut down plants last spring due to the coronavirus pandemic, resulting in a massive hit to second-quarter sales.

But GM saw a surprisingly hot market in the second half of the year.

Carmakers now are dealing with another unexpected problem in the wake of Covid-19: a global shortage of semiconductor chips stemming in part from outsized demand for personal electronics during the pandemic.

GM said the semiconductor shortage would reduce operating profits in 2021.

But the company’s full-year forecast is still better than last year, and the supply crunch will not affect investments in electric autos or autonomous driving technology, executives said.

GM reported fourth-quarter profits of US$2.8 billion (RM11.33 billion), compared with a loss of US$194 million (RM784.83) in the same period of 2019.

For all of 2020, GM’s profits dropped 4.5% to US$6.4 billion (RM25.89) and revenues fell 10.7% to US$122.5 billion (RM495.57 billion).

“The semiconductor shortage won’t slow our growth plans,” GM Chief Executive Mary Barra told reporters, adding that the automaker still expects a “very good” 2021.

Barra described the semiconductor situation as fluid and said the company was tweaking its production plans and would hold onto some mostly-completed vehicles, not shipping them to dealers until semiconductors could be installed.

GM on Tuesday extended a shutdown of three plants at least through mid-March due to the shortage.

Barra said GM expects to meet its full-year targets for production of critical pickup truck and sport utility models, adding that it is prioritizing its most popular vehicles for completion.

Barra told analysts GM was pushing ahead with autonomous driving technology. She declined to put a timeframe on commercializing the venture, but said it is “not years away.” – AFP, February 11, 2021