Production setbacks have been a constant theme in the automotive industry for over a year now, with GM having dealt with recurrent plant shutdowns and severe inventory shortages over the past 12 months or so. While the chip shortage and other supply chain issues have improved in 2022, GM CEO Mary Barra told CNBC this week that the company is still dealing with various production delays on a weekly basis.
Barra appeared on CNBC’s Mad Money with Jim Cramer this week, where she shared some insights on the current situation the auto industry is facing. Barra said GM expects the current chip shortage and supply chain challenges to persist well into 2023, although the automaker maintains its same 2022 guidance of a net income ranging from $9.6 billion-$11.2 billion and EBIT-adjusted earnings of $13 billion to $15 billion.
“It’s gotten better this year than last year, but really this will go into ,” she said. “It’s going to take additional capacity.”
“But right now, it’s we solve issues and new issues pop up, and we’re just dealing with it on a weekly basis.”
While a shortage of semiconductor chips and electronic components are behind many of the production delays, automakers are also grappling with a shortage of other components, including plastics and seat foam made from petroleum-based materials. GM said in its second-quarter earnings results that it was sitting on roughly 95,000 incomplete vehicles awaiting microchips and other components. These vehicles will be completed and sold once GM has access to the components needed to finish them, it said, which will occur throughout the second half of the year.
The automaker’s Q2 earnings report also acknowledged there was “significant pent-up demand for GM vehicles amid low inventories,” with Steve Carlisle, GM executive vice president and president, North America, vowing to address the problem as quickly as possible.
“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 said at the time.