GM is now under pressure from inflation and a shortage of global computer chips.
The automaker said on Tuesday its profit fell 40 percent in the three months to June, mainly as a result of higher costs for parts and materials.
The company reported profit of $1.7 billion for the second quarter, down from $2.8 billion in the same period in 2021. The decline came even as revenue rose more than 4 percent, to $35.8 billion from $34.2 billion a year earlier.
GM also sold more vehicles — 817,000 cars and light trucks worldwide in the second quarter, up from 760,000 in the same period last year.
“This is largely a result of some of the inflationary pressures that we’ve seen,” the company’s chief financial officer, Paul Jacobson, said on a conference call. GM had previously said it expected cost increases of about $5 billion this year.
In addition, General Motors has suffered a sharp slowdown in China, where the Covid-19 shutdown has forced many automakers to reduce or halt production for weeks or months. The company’s shipments in China fell about 35 percent in the second quarter of the previous year, and GM reported a loss of $87 million in its joint ventures there.
Mr. Jacobson said the company is taking steps to preserve liquidity and limit hiring due to an uncertain economic outlook, but it does not expect jobs to be cut. “We are not running any scenarios where we are considering layoffs,” Mr. Jacobson said.
General Motors shares fell about 2.5 percent in morning trading after the earnings announcement.
The company reiterated its forecast for profit of between $9.6 billion and $11.2 billion this year.
Jacobson said demand for new cars and trucks continued to outpace supply even as consumers faced rising prices for gasoline, groceries and other goods. “The consumer remains very, very powerful for us,” he said. “We are still seeing pent-up demand and not seeing an increase in stock levels at dealers.”
GM should begin production at a new battery plant in Ohio in the next several weeks, which will help the company increase sales of electric vehicles, Jacobson said.
Electric vehicle sales are rapidly rising and becoming a major focus for investors. Ford Motor Company recently began manufacturing the F-150 Lightning, an electric pickup truck. The company said it had booked more than 200,000 of those trucks.
Some Wall Street analysts were frustrated by the sluggish pace of GM’s electrification strategy. “Patience is running out on the street,” Wedbush Securities analyst Dan Ives said in a report released after GM announced its earnings.
GM is currently producing an expensive Hummer pickup truck and the Cadillac Lyric, an electric SUV, as well as the Chevrolet Bolt. Bolt sales slowed dramatically because a manufacturing defect in its battery forced General Motors to recall the cars and halt production for several months.
As battery production ramps up, GM plans to add electric versions of its Chevrolet Silverado pickup truck, Chevrolet Equinox SUVs and Blazer SUVs next year, and aims to have about 30 electric models worldwide by 2025.