GM signals an improved chip supply outlook

GM’s aggressive restart plans affirm the bullishness the automaker showed this month when it reported first-quarter net income of $3 billion. Its projection of a swift rebound from the chip crisis contrasted with Ford Motor Co.’s warning that profits would be limited for the rest of the year.

GM’s optimism could be driven by early planning and a potential outsourcing of chips, analysts said.

Still, the automaker and its dealers continue to cope with a drastic inventory shortage. Randy Wise Chevrolet in Flint, Mich., had only three unsold new vehicles in stock last week. The store, which usually sells 110 to 125 new vehicles a month, expects to receive just 21 more in June, 21 in July and 38 in August, said General Manager Patrick Daly.

As of Friday, May 28, GM had lost 272,292 vehicles from its North American production schedule because of the crisis, according to AutoForecast Solutions. That number is slightly lower than the firm’s estimate for GM a week earlier.

The automaker has maintained production at plants that build its popular and profitable full-size SUVs and pickups, opting to cut production at plants that build sedans and crossovers instead.

The restarting of those lower-margin vehicle plants could signal that GM has turned a corner.

“They were doing a lot of scenario planning early on” while other automakers were waiting for the situation to play out, Schuster said. “Did that lead to a better position and the ability to find a [chip] source? I can’t say for sure, but it seems like all of these things played out in a coordinated way.”

Other automakers also are confident that a recovery could begin in the third quarter.

“As we move into summer, it’ll get tougher and tougher, and then we come out of it,” said Michael Colleran, senior vice president of U.S. marketing and sales at Nissan. “We’re pretty bullish.”

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