DETROIT (AP) – General Motors’ first-quarter net income surged to $2.98 billion as strong U.S. consumer demand and higher prices offset production cuts brought on by a global shortage of computer chips.
Despite the shortage, GM stuck with full-year pretax earnings guidance of $10 billion to $11 billion issued earlier in the year and said earnings would be at the high end of the range. Full-year net income is expected to be between $6.8 billion and $7.6 billion. The company predicts a strong first half with a pretax profit of around $5.5 billion.
GM executives wouldn’t give specifics on how much production they expect to lose to the chip shortage. But CEO Mary Barra said purchasing, manufacturing, engineering and sales teams are working to divert the chips from cars and smaller SUVs to full-size pickup trucks, big SUVs and new electric vehicles.
“A lot of really good work is being done across our company to source semiconductors, allocate them across them our most in-demand and (factory) capacity-constrained products,” she said.
The company reiterated that the shortage would cost it $1.5 billion to $2 billion in earnings before taxes this year due to lost production. GM has been forced to cut production of some smaller vehicles with lower profit margins, such as the Chevrolet Equinox SUV.