A customer looks at a General Motors Co. Chevrolet vehicle on sale at a Colma, Calif. Car dealership on Monday, February 8, 2021.
David Paul Morris | Bloomberg | Getty Images
DETROIT – General Motors’ Vehicle sales in the first quarter were driven by strong consumer demand as fleet sales cratered and semiconductor chips remained in short supply closed some assembly plants.
The Detroit automaker announced Thursday it had sold 642,250 vehicles in the first three months of the year, up 3.9% year over year when Covid-19 began to force dealers and auto plants to close in March.
GM and the majority of the other major automakers in the US are expected to report first-quarter sales on Thursday. Analysts expect sales across the industry to grow 8% or 9% compared to the first quarter of 2020, despite automakers being hit by a shortage of semiconductor chips.
According to GM, retail sales to individual consumers rose 19% in the first quarter, while fleet sales to corporate and government customers declined 35% year over year. The automaker expects consumer demand to remain stable this year.
“Consumer confidence and spending will continue to rise due to incentives, rising vaccination rates and the gradual reopening of the economy,” said Elaine Buckberg, GM’s chief economist, in a press release. “Demand for automobiles should remain strong all year round.”
GM’s Buick, Cadillac, and GMC brands saw double-digit sales increases in the first quarter, while Chevrolet – the largest brand – fell 1.7%. Chevrolet’s decline was due to a 12.5% drop in sales of its full-size Silverado pickups, which the automaker attributes to a shortage of inventory due to production and shipping disruptions due to the coronavirus and chip shortages.
Automakers, traditionally less reliant on US fleet sales, had better sales than GM in the first quarter. They include: Volkswagenincreased by 21%; Toyota Motorincreased by 21.6%; Hyundai Motor, increased by 28%; and Kia Motors by 22.8%. While Stellantis – the merged automaker of Fiat Chrysler and France-based Groupe PSA – posted a 5.1% increase in sales, including a 25% increase in retail sales. Ford engine Sales increased 1% in the first quarter.
Hyundai’s sales were particularly impressive. For the quarter, the South Korean automaker’s results relied on a 38% increase in retail sales, including the best monthly retail and total sales ever in March.
“We had a great month. I mean, almost unexpected all-time records,” said Jose Munoz, CEO of Hyundai North America, on CNBC’s “Squawk on the Street” on Thursday. “I have to be optimistic, but there are a lot of challenges in the automotive industry these days.”
Automakers and suppliers warned of a semiconductor shortage At the end of last year After the demand for vehicles after a two-month shutdown of the production facilities last spring due to the Coronavirus pandemic.
Among other things, semiconductor chips are extremely important components of new vehicles for infotainment systems, power steering and brakes. The parts can contain different sizes and different types of chips.
“This chip shortage affects everyone. We are no exception,” said Munoz. “We hope that the situation will improve in the next four to five months, maybe a recovery in the third and fourth quarters. But for now we have to be very careful and try to optimize ourselves as we have done so far.”
Hyundai has been less affected by the chip shortage than others such as the Detroit automakers, each of which has announced significant production cuts for domestic plants.
Most recently, Ford announced plans to cut production on Wednesday in six plants in North America due to the problem, including plants that produce highly profitable pickup trucks.
The consulting firm AlixPartners estimates that the shortage of chips will decrease $ 60.6 billion in sales from the global automotive industry this year.