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General Motors' second quarter sales jump bolstered by strong demand for SUV
PUBLISHED ON 2021-07-01 22:25:00 EST Arghyadeep
General Motors Co posted a 40% jump in second-quarter sales in the U.S. on Thursday, bolstered by strong demand for its sport utility vehicles (SUVs) and said it is expecting the trend to continue into 2022.
The COVID-19 pandemic has triggered consumers for opting out of private vehicles and have bolstered the auto demand.
Government stimulus checks and the low-interest rates are also pushing auto sales in the U.S. even as prices have risen due to low inventories induced by global chip shortage.
“The U.S. economy is accelerating, consumer spending is robust, and jobs are plentiful,” GM Chief Economist Elaine Buckberg said in a statement.
Consumers are buying more expensive vehicles even if there are smaller discounts, which is helping to boost the profitability for carmakers and retailers, according to industry consultants J.D. Power and LMC Automotive, Reuters reported.
The company said Buick’s premium SUV sales rose 86% on strong demand for new Encore GX, redesigned Envision, and Enclave, which led to its best quarter in more than 15 years.
GM said its sub-brand Chevrolet’s deliveries went up by 31%, strengthened by demand for Bolt EV, and the brand will cover standard installation of Level 2 charging outlets for its customers from now on to continue building interest in electric vehicles.
However, the company is worried about the global semiconductor shortage and said, “Consumer demand for vehicles is also strong but constrained by very tight inventories.”
The market is showing mixed reactions to the result as General Motors opened at $59.44, up about 0.4% from the previous close and went up another 0.5% after the company announced its U.S. auto sales jumped to 688,236 vehicles in the quarter.
However, at the press time, the share is hovering at $59.08, a 24-hour low, and it is expected due to the tight inventory coupled with high demand.
“I’m not worried though as the demand is there and the economy is rebounding. Plus, it appears the worst of the chip shortage for autos will be Q2, so things should recover from here,” Morningstar analyst David Whiston told Reuters.
Picture Credit: Fortune