General Motors is now being squeezed by inflation as well as a global computer chip shortage.
The automaker said on Tuesday its profit fell by 40 percent in the three months ending in June mainly as a result of rising costs for parts and materials.
The company reported $1.7 billion in profit for the second quarter, down from $2.8 billion in the same period in 2021. The decline came even as revenue rose by more than 4 percent, to $35.8 billion from $34.2 billion a year ago.
GM also sold more vehicles — 817,000 cars and light trucks worldwide in the second quarter, up from 760,000 in the year-ago period.
“That’s a function largely of some of the inflationary pressures we’ve seen,” the company’s chief financial officer, Paul Jacobson, said in a conference call. GM had previously said it expected cost increases of about $5 billion this year.
In addition, GM suffered a sharp slowdown in China, where Covid-19 lockdowns have forced many automakers to reduce or shut down production for weeks or months. The company’s deliveries in China fell about 35 percent in the second quarter from a year earlier, and GM reported a $87 million loss in its joint ventures there.
Mr. Jacobson said that the company was taking steps to conserve cash and was limiting hiring because of the uncertain economic outlook, but that it did not expect to cut jobs. “We’re not running any scenarios where we contemplate layoffs,” Mr. Jacobson said.
GM stock was down about 2.5 percent in morning trading after the earnings announcement.
The company reiterated its forecast that it would earn $9.6 billion to $11.2 billion in profit this year.
Mr. Jacobson said demand for new cars and trucks continued to exceed supply even as consumers faced rising prices for gasoline, groceries and other goods. “The consumer is remaining very, very strong for us,” he said. “We’re still seeing pent-up demand and we’re not seeing increasing inventory levels at dealerships.”
GM should begin production at a new battery plant in Ohio in the next several weeks, which should help the company increase sales of electric vehicles, Mr. Jacobson said.
Sales of electric cars are rising rapidly and have become a major focus for investors. Ford Motor recently started making the F-150 Lightning, an electric pickup truck. The company has said it has taken reservations for more than 200,000 of those trucks.
Some Wall Street analysts have grown frustrated with the slow pace of GM’s electrification strategy. “Patience is wearing thin on the street,” Dan Ives, a Wedbush Securities analyst, said in a report released after GM reported its earnings.
GM currently produces a pricey Hummer pickup truck and the Cadillac Lyriq, an electric sport-utility vehicle, as well as the Chevrolet Bolt. Sales of the Bolt have been significantly slowed because a manufacturing defect in its battery forced GM to recall the cars and halt production for months.
As its battery production ramps up, GM plans to add electric versions of the Chevrolet Silverado pickup truck and Chevrolet Equinox and Blazer SUVs next year, and aims to have about 30 electric models worldwide by 2025.