Chip Shortage Hits Ford & General Motors, Net Profit Falls with Dropping Sales

Chip Shortage: Ford & General Motors Profits Fall with Dropping Sales

Chip Shortage Hits Ford & General Motors,

Chip Shortage Hits Ford & General Motors, Profit Falls with Dropping Sales, It is actually an excruciating moment to some companies as an increase in computer chip shortage leaves an unbearable effect on income.

However, two major and automobile companies, Ford and General Motors are receiving backlashes from the current shortage.

This has become a serious problem as both companies have to do a temporal closing down of factories which have resulted in dropping supply and a decrease in net profit.

At this time, Ford’s net income of $1.83 billion has drastically dropped by 23% as compared to the previous year.

On the other hand, General Motors (GM) has its profit dropped by 40% getting down to $2.4 billion.

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Ford has on Wednesday reported that it will still keep to its terms of payment of 10 cents for a share, which it says will begin in the fourth quarter.

It further stated that the action will cost it about $400 million for each quarter.

The aftermarket has revealed that Ford’s stock has jumped by 7.5% in the trading, while its revenue decreases by 5% as compared to a year ago which is said to be $35.68 billion.

Ford has recently made 51 cents per share, outshining the 27 cents expected by predictors.

To Ford, the U.S. is said to be its most effective region when it comes to sales. With the recent developments, sales in the country have dropped by 27 percent as of July down to September.

This has led to the company losing over 24 percent of its share in the U.S market share due to the inability to meet up with demand.

With maximum optimism, Ford’s financial manager, Mr. John Lawler stated that the company is still in a very good state of finance.

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He also stated that the company has funds to invest in electric vehicles and the company is still positive about its business.

Adding to his statement above, Mr. John Lawler has expressed concerns for shareholder returns stating that “they do not only appreciate stock price but also the dividends.”

Companies are unable to hold on to the strong demand for Ford’s Products due to a shortage in Chip.

Mr. John Lawler added that the company may sell 200,000 Mustang Mach-E electric SUVs globally for a year.

The finance manager hopes that the Chip shortage may reduce by October through December which may lead to a 10% increase in sales to merchants over the previous one.

He also stated that the chip shortage will continue in 2022 through 2023 even with a possible increase in supplies.

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For General Motors (GM), its earnings have drastically fallen from $4 billion last year with a decrease in sales.

With the U.S turning out to be its most lucrative region, the company has lost about 25 to 26.79 billion.

With the company needing its final permit from California regulators to pull through its new development sometime around next year,

The CEO, Mary Barra in a session with analysts has also displayed hope and optimism.

In her words, she stated that she is pretty sure that General Motors San Francisco subsidiary would be transporting travelers without human safety drivers sometime next year.

Moving on, she also informed newscasters that the Covid-19 pandemic and shortage of gadgets such as semiconductors at supplier factories has been one of its major challenges.

 In an attempt to reduce the intensity of the current challenge faced by the company, the GM Chief Executive officer stated that she had contacted many chip marketers.

Feedback from the many chip marketers showed that the companies are all hands on deck to see the shortage comes to an end and never have to occur again sometime in the future.

Being optimistic, she added that the company is marketing everything available wishing they had enough vehicles.

Even with the difficult time and scarcity, Barra stated that the company still has many funds coming in due to buyers willing to pay even at a high cost for new vehicles.

General Motors is topping $50,000 for the quarter as an average sale price that is about a 16 percent increase from a year ago.

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Chip Shortage Hits Ford & General Motors

David Maxwell

I am a tech lover, with experience in Front End Web Development, love writing articles about tech, science, and research.

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