General Motors Q2 U.S. vehicle sales slightly miss estimates
- General Motors Q2 U.S. vehicle sales jump almost 40% from last year.
- The U.S. car manufacturer's inventory dropped 36% in the second quarter.
- Mark Fields says he has never seen industry inventories levels this low.
General Motors Company (NYSE: GM) said on Thursday the ongoing chip shortage weighed on its U.S. vehicle sales that came in slightly lower than expected in the second quarter. Shares of the company are almost 1% down on the intraday chart.
GM’s inventory dropped 36% in the second quarter
General Motors’s Q2 sales climbed by 39.7% on a year-over-year basis since the global auto industry faced unprecedented disruption from the Coronavirus pandemic last year. Experts, however, had forecast a minimum of 40% annualised sales growth. Commenting on the sales report, GM’s Chief Economist, Elaine Buckberg, said on Thursday:
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“Consumer demand for vehicles is also strong, but constrained by very tight inventories. We expect continued high demand in the second half of this year and into 2022.”
General Motors has recovered sales remarkably from last year’s pandemic lows, but the momentum has not been impressive this year. The automaker sold 18.6 million vehicles in April, which declined to 17.1 million in May, and is expected around a much lower 15.7 million in June.
GM’s inventory dropped 36% from the end of Q1 to the end of Q2. In related news, peer Hyundai Motor Company also posted a 39% increase in second-quarter sales on Thursday and record June sales. Its subsidiary, Kia Corporation, saw similar results as well. Toyota’s June sales were up 40%, and it sold the highest number of trucks ever in the first half of 2021.
Mark Fields’ comments on CNBC’s “Squawk on the Street”
Compared to the second quarter of 2020, analysts estimate U.S. vehicle sales jumped about 52% this year. According to the former CEO of Ford Motor, Mark Fields, however, the industry inventory levels are currently down at least 50% from normal seasonal levels. On CNBC’s “Squawk on the Street”, he said:
“We’ve never seen car inventories at such low levels. I think it’s going to take at least the next 12 to 15 months to get the inventories back to where they were pre-COVID because of the supply chain issues and pent-up demand.”
Since the inventory can’t cater to the strong demand at the moment, Fields added, car prices are likely to go up in the upcoming months.