GM’s second-quarter net income decreases 39% from this time a year ago

Despite revenue growth of 4.7% in the second quarter, General Motors on Tuesday announced a year-over-year decline in net income of almost 40% and stated that it anticipates better performance in the second half of the year.

GM’s net income decreased to $1.7 billion as the manufacturer battled the global chip shortage. GM was hit the hardest by the shortage in June. To increase revenue and cut costs, GM is slowing down hiring and curbing spending.

According to a statement from GM, adjusted earnings before interest and taxes decreased 43% to $2.3 billion while revenues increased to $35.8 billion.

Chief Executive Officer, Mary Barra, stated recently that GM is making significant changes to increase its cash flow, including hiring efforts. Despite the net revenue decrease, GM still anticipates hitting its year-end goals.

Chief Financial Officer, Paul Jacobson, stated in a conference call, “We’ve slowed down some hiring (and) we have put off some costs and expenses we were going to make going into this year to try to balance that out with the pressure we’ve seen from both inflation as well as some of the other supply-chain challenges.” GM also responded to inflation and supply shortages by increasing its vehicle prices by an average of $6,600.

As COVID-19 outbreaks, and more recently, Russia’s invasion of Ukraine, forced production closures and caused chaos with logistics around the world, GM has been dealing with supply chain interruptions for the past few quarters.

These setbacks have been felt by GM’s American dealers, whose inventory levels are still low. Over the past year, including into the second quarter, the dealers only have 10 to 15 days’ worth of inventory, the business reported on Tuesday. That is significantly less than the usual 60 to 90 days.