GM warns of supply chain impact on sales

General Motors stated that its second-quarter sales and shipments were disrupted by supply chain issues.

Video transcript

BRIAN SOZZI: There are three things you need to know right now. Breaking news out of General Motors. One of the most important companies in the market, I'll say. The company is saying Q2 sales were impacted by timing of semiconductor shipments and supply chain disruptions. The stock is currently halted.

And Julie, so interesting release here from General Motors. Not surprising, we have continued to hear automakers just struggle to get the chips they need to make cars. They are out here reaffirming their net income guidance. All right, check, done with that. But a bigger concern here is they have made 95,000 cars, and they can't get all the chips that these cars need. So what are they going to do with them?

JULIE HYMAN: Well, apparently, they're shipping cars without finishing them.

BRIAN SOZZI: Yes.

JULIE HYMAN: That's what it sounds like here. The company says that a total of 95,000-- about 95,000 vehicles in our inventory that were manufactured without certain components as of June 30. And then were shipped out there and sold to dealers.

BRIAN SOZZI: Right.

JULIE HYMAN: So, you know, they're not done with those--

BRAD SMITH: And--

JULIE HYMAN: --[INAUDIBLE].

BRAD SMITH: --they had a subsequent, as well, release that they put out talking about the year over year. And just to put this in context, 15% lower year over year the second quarter sales were. Their market share, they mentioned, was up by one point. But at the end of the day here, 582,401 vehicles in the United States sold during the second quarter of 2022.

BRIAN SOZZI: The warnings are starting to pile up, folks. General Motors out here, Restoration Harbor this week, Bed Bath & Beyond. You're really getting the sense now the second quarter earnings season could be pretty ugly. And then but in the same breath, GM shares down about 46% year to date. At what point is this priced in? That will be something you have to watch here in the coming weeks.

JULIE HYMAN: Yeah, I'm trying to figure out what the comparable numbers are here for the forecast. Because the company is saying for net income, $1.6 to $1.9 billion. But EBIT adjusted net income will be from $2.3 to $2.6 billion, so--

BRIAN SOZZI: I'd roll with the adjusted EPS here.

JULIE HYMAN: OK.

BRIAN SOZZI: And they are reaffirming that is $650 to $750 a share, but is it believable? When you putting out this type of warning, warning about component shortages. I mean, how long is that guidance? Can really be hit?

BRAD SMITH: And this is when they're still ramping up a lot of their EV production as well. They mentioned in this most recent quarter they're going to continue to gradually increase production of the Cadillac LYRIQ, the GMC Hummer EV. I would hate to be in a Hummer EV and some of the components [INTERPOSING VOICES].

BRIAN SOZZI: Maybe you'll get one in 2030.

BRAD SMITH: Maybe in 2030.

JULIE HYMAN: Well, I'm like, do you get to take it back when they get the components in--

BRAD SMITH: Right, what is the recall process?

JULIE HYMAN: --and they retrofit it?

BRAD SMITH: Right.

JULIE HYMAN: I mean, how does that work? Like--

BRIAN SOZZI: If I'm paying over $100,000 for a Hummer--

JULIE HYMAN: Exactly.

BRIAN SOZZI: --I want my heated seats. I want my cooled seats.

JULIE HYMAN: Well, and are they prioritizing the higher end vehicles and those types of items that people are paying for? And just not including everything on the low end?

BRIAN SOZZI: You should order one and find out.

JULIE HYMAN: No, I'm all set.

BRIAN SOZZI: You're good. [LAUGHS]

JULIE HYMAN: I'm all set.

BRAD SMITH: They didn't say that this was like Toyota, though, and that the wheels might fall off.

[LAUGHTER]

JULIE HYMAN: No.

BRIAN SOZZI: That's good.

BRAD SMITH: That is a good thing.

BRIAN SOZZI: I like the positive.

BRAD SMITH: Silver lining.

JULIE HYMAN: They're just--

BRIAN SOZZI: I like it.

JULIE HYMAN: --metaphorically falling off. They're not literally falling off.