Published - July 05, 2022 @ 14:06 PM (EET)

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On Friday, General Motors (NYSE:GM) offered lackluster guidance for its second quarter as continued supply chain disruptions impact its wholesale volumes.  

Before issuing its sales results, the automaker warned it is still suffering from a component shortage, saying it has about 95,000 vehicles in its inventory that were manufactured without certain elements.

Despite the issues, GM reaffirmed its full-year net income guidance range of between $9.6 billion and $11.2 billion and adjusted automotive free cash flow guidance of between $7 billion and $9 billion, among other key metrics.

For the quarter, the company expects to post a profit between $1.6 billion and $1.9 billion compared to analyst expectations of net income up to $2.6 billion.

Vehicle sales for the second quarter stood at 582,401, up 14% compared to the previous quarter.  Remarkably, General Motors' market share also improved by 16.3% in the quarter.

In a statement release, GM North America President Steve Carlisle said, 

"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."

Vehicle production was robust during the quarter, reflecting 247,839 vehicles in dealer inventory at the end of June.  However, units were down 9.5% from about 274,000 at the end of March.

NOW WHAT

Some investors and analysts appear to be frustrated that chip supply constraints are still impacting production.

However, GM has been candid about supply chain issues, especially chip shortages.    The good news is that GM said at an investor conference in mid-June that it is seeing no signs of weakening consumer demand and that pricing remains strong.

In short, with the 45% drop in GM's price this year, the stock seems irrationally beaten down, given that the company's underlying forecast hasn't changed.

With a market cap of $46.94 billion, General Motors remains one of the world's largest vehicle manufacturers.

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