Toyota Topples GM. Why GM’s Stock Gained Anyway.

view original post

A shortage of semiconductors hurt production and sales at General Motors.

Bill Pugliano/Getty Images

General Motors had a rough end to the year, with sales falling so fast that Toyota Motor sold more cars in the U.S. than the Detroit auto maker for the first time. Yet GM stock took off, signaling that Wall Street isn’t worried.

The stock market is forward looking, and investors don’t really care what happened three months ago, as long as it isn’t too big a surprise. What will matter for GM in 2022 is increasing production after a year of semiconductor shortages and product recalls, as well as output of electric vehicles.

GM delivered 440,745 vehicles in the U.S. during the fourth quarter of 2021, marking a decline of 43% from 771,323 in the fourth quarter of 2020. GM Deliveries totaled 446, 997 vehicles in the third quarter, only some 6,000 more than in the fourth quarter, so the figures don’t look as bad sequentially.

And it isn’t as if people don’t want GM’s cars. The key factor for the entire industry, with the exception of Tesla (TSLA), was a shortage of microchips. Tesla increased its global deliveries by about 87% to roughly 936,000 vehicles in 20201, but Toyota fared only a little better than GM. It delivered about 474,000 vehicles in the U.S. in the fourth quarter, down about 28% compared with the year-earlier quarter.

Still, for the full year, Toyota delivered about 2.3 million vehicles in the U.S., compared with 2.2 million vehicles for GM, in what appears to be the first time that has happened. Toyota wasn’t immediately available to comment.

GM stock rose following the news, for a gain of 7.5%, while the S&P 500 was 0.1% lower and the Dow Jones Industrial Average gained 0.6%. Toyota’s U.S.-listed American depositary receipts were up 6.1%.

What investors want to see from GM in 2022 is more chips and more production.

“In 2022, we plan to take advantage of the strong economy and anticipated improved semiconductor supplies to grow our sales and share,” said Steve Carlisle, GM executive vice president and president of GM North America, in a company news release. “We will also further strengthen our industry leadership in trucks and begin our drive to EV leadership in North America.”

Investors also want to see progress electrifying its product lineup. CEO Mary Barra is expected to unveil an all-electric Chevy Silverado at the CES trade show in Las Vegas on Wednesday.

Investors will also want to see production of the Chevy Bolt production resume this year. GM recalled Bolt vehicles and halted production to fix a battery defect caused by a supplier in 2021.

GM delivered 25 Bolt EVs in the fourth quarter and 24,828 in 2021, compared with 20,754 in 2020. GM also sells EVs in China though a joint venture.

Write to Al Root at allen.root@dowjones.com