GM finds inflation takes more than it gives

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A Cadillac Lyriq electric vehicle under General Motors is seen during its world premiere on a media day for the Auto Shanghai show in Shanghai, April 19, 2021. REUTERS/Aly Song

WASHINGTON, Aug 4 (Reuters Breakingviews) - Inflation is proving a double-edged sword for General Motors (GM.N). It reported record pre-tax profit in the second quarter as demand surged despite high vehicle prices. But it posted $1.97 earnings per share, excluding certain items, missing analyst estimates partly due to rising costs read more .

Supply-chain crunches, notably a shortage of chips, and the rising cost of raw materials and labor make it more expensive to produce a vehicle. GM’s cost of auto sales more than doubled in the second quarter to about $27 billion. In the last half of 2021, the world’s top automaker expects commodity costs will rise by up to $2 billion. Last week, Ford Motor (F.N) said operating profit will likely be weaker in that same period for similar reasons. With chip shortages expected to extend into 2022 , speeding sales will hit more inflation potholes. (By Gina Chon)

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Editing by Swaha Pattanaik and Amanda Gomez

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