Both GM and Ford have recently outlined strategies for generating more revenue from software-powered services, and argued their businesses deserve to be valued more like electric carmaker Tesla Inc.
But now and for the next several years, the Detroit automakers – like Tesla – will depend mainly on profit from selling hardware.
The chip shortage has hit sales hard as inventories on dealer lots dry up. U.S. new-vehicle sales in September dropped to a tepid annual rate of just over 12 million vehicles, and industry forecaster IHS Markit last month cut its 2022 global light vehicle production forecast by 8.5 million vehicles or 9.3 percent, citing the supply-chain disruptions.
Last month, GM CFO Paul Jacobson cautioned the company’s third-quarter wholesale deliveries could be down by 200,000 vehicles because of chip shortages.
Meanwhile, the rise in the price of steel and other commodities has been unrelenting. And the disruptions in the global supply chain, whether congested ports or a shortage of materials like resin and magnesium, have continued to drive up operating costs and interrupt production schedules.
Recent warnings about supply-chain disruptions from such suppliers as Magna International, Continental, Autoliv, Aptiv Plc, Lear Corp. and ABB Ltd. suggest the worst of the fallout could still lie ahead. Major North American suppliers Nemak and Gentex last week reported deteriorating Q3 results.
Several auto executives, including GM President Mark Reuss, have said they see the chip situation stabilizing next year, albeit at lower-than-desired levels. However, some executives such as Daimler CEO Ola Kallenius feel the impact could last well into 2023.
Wells Fargo said earlier this month it expected GM and Ford to guide investors to the lower end of their financial forecasts for the year when they report.
