“We have also simulated many economic downturn scenarios and are ready to take deliberate action when and if necessary,” she said.
Recessions usually bring down demand for new cars and hurt the auto industry.
GM sees no signs of a recession yet, given the strong demand for new cars, chief financial officer Paul Jacobson said in response to media questions.
“We do not see anything that would indicate any problems in the near future, but we must be aware of the noise around and what other people see,” he said. “We’re going to be very flexible and very nimble and responsive to that.”
Jacobson declined to comment on the chances of a recession over the next year, saying: “I don’t like to get into controversy in forecasting. Our job is to respond, plan and prepare.”
He said all the data on his customers, including credit reports from GM Financial, show great continued strength among US consumers and pent-up demand for auto purchases.
“But we are watching and we will make sure that we adjust the business as we need,” he added.
GM tried to reassure investors by saying it expects to hit its full-year earnings target despite economic concerns.
“We feel like we’re in a really good position,” Jacobson said. “We feel we are on our way to the end of a year in which [forecast] at the beginning of the year.”
Drop in profit despite increase in revenue
But revenue rose $1.6 billion to $35.8 billion, well above forecasts of a drop in revenue. The number of vehicles sold by GM dealers and distributors worldwide remained about the same as in the first quarter, but down 19% to 1.4 million compared to last year.
The limited supply of cars and strong demand, especially in North America, have pushed prices up. Strong pricing added $1.8 billion to the company’s quarterly results.
The drop in car sales was partly due to the lockdown in China, and partly due to the ongoing shortage of computer chips and other essential supplies. The company had 95,000 vehicles built in a quarter but was unable to complete due to lack of parts. About 75% of these are full-size pickups and SUVs, GM’s top-grossing vehicles. Jacobson said the company expects to complete these vehicles and sell them in the second half of the year, and has already made progress this month.
“We thought we were going to produce a lot more cars this quarter,” he said. “Practically all of these cars will be back in the second half of the year.”
GM is losing $87 million in China, the first loss since the start of 2020, when the pandemic began.