© Ryan Garza, Detroit Free PressThe Renaissance Center in downtown Detroit sits in the background as people walk along the Detroit RiverWalk on March 11, 2021.
General Motors says it will finish the year strong, in part because of its strategy in dealing with a worldwide shortage of semiconductor chips.
In an unusual move, GM CEO Mary Barra issued a Letter to Shareholders simultaneously with GM's first-quarter earnings results Wednesday. In it, Barra said GM expects to have a strong first half with adjusted earnings before interest and taxes of around $5.5 billion and GM is reaffirming its full-year guidance, "based on what we know today," coming in at the higher end of the $10 billion to $11 billion EBIT-adjusted range that it shared earlier this year.
"Our supply chain and manufacturing teams are maximizing production of high-demand and capacity-constrained vehicles," Barra wrote in the letter. "Our engineering teams are creating effective alternative solutions, and our sales teams, together with our dealers, are finding creative ways to satisfy customers despite lean inventories."
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The automaker reported a first-quarter net profit of $3 billion, up from $294 million for the first quarter a year ago. Its EBIT was $4.4 billion, up from $1.3 billion. Net revenue was slightly down at $32.5 billion compared to $32.7 billion.
GM credited a solid first-quarter to its ability to manage the complex production problems created by the chip shortage, as well as the strength of the auto markets in North America and China, and robust revenues at GM Financial, even while it continues to face the industry-wide challenge of the chip shortage that is crippling production.
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The results give Clarkston-based Chevrolet dealer Katie Bowman Coleman hope that in the third-quarter, her inventory will rise, along with her sales.
But Coleman said she believes the chip shortage will dissipate by the third quarter and she will start seeing big loads of new cars from the factory come rolling onto her lot. She knows if she can get it, she can sell it.
© John MartinAn aerial photo of Bowman Chevrolet in Clarkston on May 3, 2021. The store only has about a third of the new car inventory it would usually have because of a semiconductor chip shortage that has caused GM and other automakers to halt some production.
Coleman has about 204 new cars on her lot at Bowman Chevrolet, when she usually has 600 to 800. It's "not terrible" compared to some dealers who have far fewer cars in stock. Still, customers notice a scarcity on the shelves.
"Customers do ask all kinds of questions about the shortage. GM is scrambling," said Coleman. "In the fall of 2019, GM had the strike, then we were getting up to normal levels again, then COVID hit. Now we have the chips shortage. GM is doing pretty well, as best it can, but it's still a challenge."
Follow Detroit Free Press reporter Jamie L. LaReau on Twitter @jlareauan.
This article originally appeared on Detroit Free Press: GM reports $3.3B first-quarter net profit despite semiconductor chip shortage