Ford and General Motors have reported declines in revenue and profits as a result of the semiconductor shortage.
Ford released its third-quarter earnings on Wednesday, confirming that it generated $1.8 billion of net income on a revenue of $35.7 billion. This represents an approximate drop of 5 per cent from the $37.5 billion in revenue reported in the third quarter of 2020.
Additionally, Ford’s adjusted earnings before interest and taxes were $3 billion across the July-September period. This was down from the $3.7 billion during the third quarter of 2020.
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General Motors earned $2.4 billion in net income during the third quarter with a revenue of $26.8 billion. That was a considerable drop of 25 per cent from 2020 when it reported $4 billion in net income and $35.5 billion in revenue. GM also sold 27 per cent fewer cars during the quarter than in 2020.
“The quarter was challenging due to continuing semiconductor pressures… but it also includes very strong results from GM Financial, the recall cost settlement we reached with our valued and respected supplier and JV partner LG Electronics, and ($300 million) in equity income from our joint ventures in China,” GM chief executive Mary Barra said in a statement.
GM’s $1.9 billion settlement with LG to cover the cost of recalling the Chevrolet Bolt was a big win for the automaker as it was prepared to take a hit for the recall in the second quarter. However, CNN reports the settlement produced a $700 million net gain for GM.
