GM Reaffirms Full Year Guidance, Offers Updates On Supply Chain Snags And Q2 Sales

GM shares are slightly lower after the company released updated financial estimates on Friday morning in an 8-K. GM halted its stock about 45 minutes before the cash open and dropped an 8-K with updated guidance. 

GM raised its full year EBIT guidance and also reiterated its full year earnings guidance. The company said that during its Q2, vehicle wholesale volumes “were impacted by timing of certain semiconductor shipments and other supply chain disruptions”.

“As a result, we had a total of approximately 95 thousand vehicles in our inventory that were manufactured without certain components as of June 30, 2022, a majority of which were built in June. We expect that substantially all of these vehicles will be completed and sold to dealers before the end of 2022,” a company 8-K reads. 

The filing then went on to reaffirm the company’s full year guidance:

For the full year, we reaffirm our net income guidance range of between $9.6 billion and $11.2 billion, EBIT-adjusted guidance range of between $13.0 billion and $15.0 billion, EPS-diluted guidance range of between $5.76 and $6.76, EPS-diluted-adjusted guidance range of between $6.50 and $7.50, automotive net cash provided by operating activities guidance range of between $16.0 billion and $19.0 billion, and adjusted automotive free cash flow guidance range of between $7.0 billion and $9.0 billion, and also continue to expect a year-over-year wholesale volume increase of 25%-30% and GMNA EBIT-adjusted margins of 10%.

The company also released its Q2 sales figures, telling investors in a PR that it “sold 582,401 vehicles in the United States in the second quarter of 2022 and the company increased its sales and market share sequentially for the third consecutive quarter”. 

Among the company’s highlights for Q2 were:

GM extended its leadership in full-size pickup truck retail market share for the 13th consecutive quarter, despite very low inventory, with 203,041 combined total sales of the Chevrolet Silverado and GMC Sierra. Their estimated retail market share was 44%. The Chevrolet Silverado remains the fastest growing full-size pickup truck in the industry (J.D. Power PIN), with Silverado HD recording its best first half in retail sales since 2007.

Pent-up demand and improved availability helped drive large year-over-year increases in deliveries of the Chevrolet Camaro, up 63%; Chevrolet Colorado, up 52%; Chevrolet Malibu, up 563%; Cadillac XT4, up 116%; and Cadillac CT5, up 70%.

GMC delivered its best-ever first half retail market share (J.D. Power PIN). Total sales of the GMC Canyon grew 40% and GMC Terrain grew 37% in the quarter. The GMC Sierra HD, which was up 31% in the quarter, delivered its best second quarter and first half on record.

GM’s commercial, government and daily rental deliveries were up a combined 29%, with each category posting double-digit growth as customers took advantage of improved availability to refresh and expand their fleets, which reflects strong employment and the recovery in the travel and leisure industries. Sales to commercial and government customers were 73% of the fleet sales mix.

Commercial demand was especially strong for full-size vans, up 12%; full-size pickups, up 14%; medium-duty trucks, up 13%; and midsize pickups up 65%.

Electric vehicle sales were over 7,300 units, including some of the first deliveries of the BrightDrop Zevo 600 and GMC HUMMER EV Pickup, as well as the resumption of Chevrolet Bolt EV and Bolt EUV production.

Cadillac LYRIQ production is accelerating, with initial deliveries in process. Orders for the 2023 model year sold out within hours and preorders for the 2024 model opened on June 22.

GM will gradually increase production of the Cadillac LYRIQ and GMC HUMMER EV Pickup in the second half of 2022. Ultium Cells LLC begins producing cells in Ohio to support expanded EV manufacturing starting in August.

GM’s sales incentives remained near record lows in the quarter at 2.3% of average transaction prices, according to J.D. Power PIN estimates.

The second quarter SAAR was an estimated 13.4 million light vehicles compared to 17 million a year ago.

Steve Carlisle, GM executive vice president and president, North America commented: “GM’s sales and market share have grown each of the last three quarters, even with lingering supply chain disruptions. Our long-term momentum will continue to build thanks to the launches of groundbreaking new EVs like the GMC HUMMER EV and Cadillac LYRIQ, and the tremendous customer response to the Chevrolet Silverado and GMC Sierra.”

“We appreciate the patience and loyalty of our dealers and customers as we strive to meet significant pent-up demand for our products, and we will work with our suppliers and manufacturing and logistics teams to deliver all the units held at our plants as quickly as possible,” Carlisle concluded.