DETROIT — General Motors posted net income of $2.8 billion in the fourth quarter, including an adjusted $2.6 billion profit in North America.
Although GM’s full-year profit fell 4.5 percent from 2019 to $6.4 billion, strong sales and pricing in the second half easily overcame the losses sustained in the early months of the pandemic. Executives said the automaker is on pace to generate higher earnings in 2021, even as a shortage of microchips threatens to sap some of its momentum.
The fourth-quarter profit compares to a $194 million loss a year earlier as a result of the UAW strike.
Global revenue in the fourth quarter rose 22 percent to $37.5 billion and adjusted earnings before interest and taxes rose to $3.7 billion from $105 million a year earlier, the automaker said Wednesday.
GM earned $283 million from its international regions, compared to a $120 million loss a year earlier, and China equity income was $248 million, up from $239 million.
Earnings from GM Financial more than doubled to $1 billion.
A global shortage of microchips will reduce 2021 earnings by $1.5 billion to $2 billion before interest and taxes, GM said, but it won't affect growth and electric vehicle initiatives. GM plans to prioritize production of full-size pickups, SUVs and EVs.
The automaker this week extended production cuts because of the chip shortage at plants in Kansas City, Kan.; Ingersoll, Ontario; and San Luis Potosi, Mexico, through at least mid-March. GM will build vehicles at plants in Wentzville, Mo., and Ramos Arizpe, Mexico, but leave them incomplete for final assembly later.
GM cut production at plants that will have the ability to add capacity later this year, CFO Paul Jacobson told analysts. Full-size SUV and pickup plants are already running at full capacity, and making up production of those vehicles would be more difficult later in the year, he said.
GM expects U.S. light-vehicle sales to reach the a mid-16 million-unit level this year, with stronger demand in the second half of the year as vaccination rates increase. GM expects $10 billion to $11 billion in adjusted earnings before taxes in 2021, including the impact of the microchip shortage.
GM will invest $7 billion in electric and autonomous vehicle development this year as part of its promise to devote $27 billion to EV and AV development through 2025.
Chevrolet’s reveal of the freshened Bolt EV and new Bolt utility vehicle Feb. 14 will begin a steady launch of EVs for GM, CEO Mary Barra said. GM has said it would launch 30 EVs globally through 2025, and two thirds of those launches will be in the U.S. By 2035, GM aims to have an all-electric lineup.
“Customers will drive this. There is really nothing holding General Motors back,” she said. “I believe we have talent, technology, profitability and balance sheet to lead.”
Low inventory levels continue to challenge GM after the automaker, along with others, shut down plants in the spring to curb the spread of the coronavirus. U.S. dealer inventory at end of the fourth quarter was only 411,000, compared with 616,000 a year earlier when GM was recovering from the UAW strike.
Still, GM's U.S. light-vehicle sales rose 4.8 percent in the fourth quarter, as retail sales began to reach pre-pandemic levels and redesigned full-size SUVs hit the market.
U.S. sales for the full year decreased 12 percent to 2.5 million vehicles. It marked GM's strongest fourth quarter on a retail basis since 2007. Retail deliveries increased 12 percent, the automaker said in a statement last month.
Full-year net income fell 4.5 percent from 2019 to $6.4 billion, and adjusted earnings before interest and taxes rose 15 percent from 2019 to $9.7 billion.
Last year, GM posted its largest market share gain since 1990, Barra said.
GM-UAW workers will receive about $9,000 in profit sharing, more than double the $3,625 Ford Motor Co.-UAW workers will receive.
GM’s strong profit in North America is “a testament to our UAW-GM Membership, who produce some of the finest and most sought-after vehicles in the world, right here in the U.S.A.,” Terry Dittes, UAW vice president and director of the GM Department, said in a statement.
GM shares closed Wednesday's trading down 2.1 percent to $54.88.