Automakers Including GM are Seeing Strong Q1 Sales Even with a Chip Shortage

Despite there being an ongoing shortage in semiconductor chips, automakers are seeing strong vehicle sales as consumer demand came back during the first quarter.

Analysts are looking for first quarter auto sales to jump around 8 or 9% compared to the first quarter of last year before the pandemic hit. Fortunately many automakers are already outperforming these forecasts.

It was last year that the Covid-19 pandemic had forced dealerships and auto plants to shutter in March.

Those automakers who are not as reliant on fleet sales to corporate and government clients in the U.S. were seeing a boost in sales in Q1, especially non-domestic automakers who reported significant increases.

Detroit automakers saw single-digit improvements in sales compared to Q1 of 2020.
Non domestic vehicle makers who saw big jumps included: Volkswagen, up 21%; Toyota Motor, up 21.6%; Hyundai Motor, up 28%; and Kia Motors, up 22.8%. Stellantis – the merged automaker of Fiat Chrysler and France-based Groupe PSA saw a 5.1% increase in sales, including a 25% increase in retail sales.

Ford Motor said its first-quarter sales were up 1% while General Motors’ sales were up 3.9%.

“For the domestic automakers, they’re showing a bit more modest increases,” Jessica Caldwell, executive director of insights at Edmunds.com, said to CNBC. “It looks like they’re really affected by the fleet opportunity being down because of the limited inventory.”

Retail sales to individual consumers increased 19% in the first quarter said GM, while fleet sales to corporate and government clients declined 35% from a year earlier. The automaker expects consumer demand to remain resilient throughout this year.

“Consumer confidence and spending will continue to increase due to stimulus, rising vaccination rates and the progressive reopening of the economy,” said GM’s chief economist, Elaine Buckberg. “Auto demand should remain strong throughout the year.”
There has been a semiconductor shortage since late last year after demand for vehicles rebounded stronger than expected.

Semiconductor chips play important roles in new vehicles for infotainment systems, power steering and brakes, among other systems.

“This chip shortage is impacting everybody. We’re not an exception,” Jose Munoz, CEO of Hyundai North America on CNBC’s “Squawk on the Street.” “We hope that if in the next four to five months, the situation gets better, perhaps Q3, Q4 will see a recovery. But for the time being we have to manage very carefully and try to optimize as we are doing so far.”
This week Ford announced plans to cut production at six plants in North America due to the shortage.

AlixPartners estimates the chip shortage will cut $60.6 billion in revenue from the global automotive industry in 2021.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.