GM manages to keep pickup lines, profits rolling

DETROIT — The microchip shortage has taken a bigger toll on General Motors’ production plans than on Ford Motor Co.’s. But financially, the two automakers have very different outlooks for the remainder of the crisis.

While Ford says it will earn relatively little profit for the rest of the year, GM believes it has found a path through the storm that will largely shelter its bottom line.

By shutting down production of lower-profit crossovers and sedans for months, GM has been able to funnel its limited chip supplies to its most lucrative plants. It has continued to churn out high-profit pickups and SUVs without interruption.

“The trucks are the profit center of the Detroit 3,” said Sam Fiorani, vice president at AutoForecast Solutions. “Keeping them in production is a large part, if not all, of their profits. GM has the benefit of having lower-demand, lower-profit cars in their lineup to remove from production, where Ford had already gotten rid of all their sedans. They don’t have that option.”

Together, GM and Ford have had to cut output by more than half a million vehicles so far this year, with much more downtime to come over the next few months.

Two nameplates, the Chevrolet Equinox and Malibu, accounted for half of GM’s lost production, according to AutoForecast Solutions data.

At Ford, two cash cows, the F-Series and Explorer, have been hit hardest.

Despite the headwinds, GM reaffirmed its 2021 outlook of as much as $11 billion in adjusted earnings this year. Ford recently lowered its full-year guidance to as little as half that amount.

“We have confidence that we’re going to be able to hit our guidance and that with everything we know today, we’ll be at the top end,” GM CEO Mary Barra told analysts.

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