Toyota beats GM again in first quarter sales as chip shortage persists

General Motors reported a first-quarter U.S. sales decline Friday as it, and the rest of the auto industry, continues to struggle with a global shortage of semiconductor chips and other production disruptions.

For the quarter, GM said it sold 512,846 vehicles, a 20.1% decline from the 642,250 new vehicles it sold in the year-ago period. But its heavy-duty pickups made in Michigan saw a sales surge as GM managed to direct chip parts to Flint Assembly to keep production running.

The chips are used in a variety of car parts and the shortage has been crippling new car production since this time last year.

The chips shortage hurt GM last year to the point that, in a historic turn, Toyota Motor North America captured the U.S. sales crown from GM for 2021. GM had been the nation's auto sales leader for decades.

On Friday, Toyota reported its first-quarter sales beat GM again with 514,592 sales, a 15.8% decline from the year-ago quarter when Toyota sold 603,066 new vehicles.

The victory was narrow but, "Toyota has been plagued with some of the lowest inventories in the business so it is miraculous that it still was the bestselling automaker in the U.S.," said Michelle Krebs, executive analyst at Cox Automotive.

Besides strong sales of its Chevrolet Silverado and GMC Sierra heavy duty full-size pickups, GM also saw strong sales gains in its full-size SUVs such as the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade. GM's management team directed chip parts to Arlington Assembly plant in Texas where the high-profit popular big SUVs are made.

“Our ability to meet pent-up demand improved dramatically thanks to a tremendous effort by our supply chain and manufacturing teams to keep our plants operating at close to normal levels,” said Steve Carlisle, executive vice president and president of GM North America. “Supply chain disruptions are not fully behind us, but we expect to continue outperforming 2021 production levels, especially in the second half of the year.”

Industry outlook

Ford Motor Co. reports its first-quarter sales on Monday, and the auto industry as a whole is expected to report a sales decline.

On Friday, Stellantis reported its U.S. sales dropped 14% in the first quarter from 469,651 to 405,221 vehicles sold due to the supply chain disruptions that caused inventory shortages.

More: Stellantis sales drop 14% as automaker grapples with industry-wide challenges

Edmunds.com forecasts that 3,296,280 new cars and trucks will be sold in the U.S. in the first quarter, a 15.2% decrease from a year earlier, but a 0.4% increase compared with the fourth quarter.

“Skyrocketing gas prices were top of mind for consumers in March, but the lack of inventory is what ultimately depressed new vehicle sales in the first quarter,” said Jessica Caldwell, Edmunds’ executive director of insights.

Automakers face ongoing disruptions to supply chains and production created by the chip shortage and COVID-19. Earlier this month, GM said it would idle Fort Wayne Assembly plant in Indiana, which builds the light-duty full size Silverado and Sierra pickups, for two weeks starting April 4 because of a shortage of chip parts.

Through the end of March, the global auto industry lost production of about 1.1 million new vehicles this year because of the semiconductor supply issue, according to AutoForecast Solutions.

Beyond that problem, the industry faces possible new supply chain disruptions from Russia's invasion of Ukraine.

"This combination of headwinds could mean that these inventory issues will persist well into the rest of the year," Caldwell said.

GM estimates total light vehicle sales in the first quarter is trending at 14.1 million new-car sales, down from 16.8 million a year ago. It is because of lower inventory and production levels.

But GM's Chief Economist Elaine Buckberg said she expects industry light vehicle volume will improve and top 2021 levels because of the strong labor market, higher vehicle production and pent-up demand.

“Ordinarily, a U.S. economy this strong would translate into light vehicle sales in the 17-million range,” she said. “Improvements in the supply chain should lift auto sales as the year progresses, despite headwinds from higher inflation and fuel prices.”

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GM's wins

GM’s first quarter market share was expected to fall significantly from last year, Krebs said. The chip shortage hit GM "hard and early" affecting its biggest sellers such as the Silverado and Sierra pickups and the Chevrolet Equinox midsize SUV, she said.

Krebs said Cox cannot calculate market share until all automakers report quarterly sales.

GM said it had its best commercial fleet quarter in nearly three years. In the commercial market, sales of full-size pickups were up 5%, compact SUVs up 131% and midsize pickups up 23%.

The commercial fleet businesses accounted for about 24% of its first quarter sales. It grew 10% year over year, with sales to commercial and government fleets up 14% and 18%, respectively.

GM's total sales across all Silverado models dropped 4.3% to 121,107 and across Sierra pickups it fell 10% to 56,617.

But the heavy-duty models supported the pickup segment for GM. Sales of the Silverado heavy duty pickup surged 11.1% to 37,779 and sales of the Sierra heavy duty shot up 12.2% to 19,812.

The combined retail market share of the heavy-duty pickups was a segment-leading 41.5% in the quarter, according to J.D. Power PIN data. That's a 10 percentage point increase from a year ago and GM’s strongest quarter in heavy duty retail market share in over a decade, the company said.

For the light duty pickups, the Silverado sales declined 10.7% to 81,017 and the Sierra sales dropped 18.7% to 36,805. But they have a combined retail market share of 42%, up 2.6 points year over year, according to J.D. Power PIN.

For the full-size SUVs, sales of the Cadillac Escalade rose 6.7% to 10,505, sales of the Chevy Tahoe rose 4.1% to 23,979, the Suburban surged 11.% to 12,424 and GMC Yukon sales soared 15.4% to 21,296.

Chevrolet Tahoe sales to government customers increased 243%, GM said. GM makes a Tahoe police vehicle.

GM's losses

But sales of GM's midsize SUVs and sedans were another story, though not surprising given the automaker has produced fewer of those vehicles, having had to idle production at the plants that build those vehicles because of chips shortages.

Take Buick, a brand comprised of small and midsize SUVs. For the quarter, Buick reported sales plunged 58.2% to 19,146 total vehicles sold.

The Escalade was the only vehicle in Cadillac's lineup to support its sales. The brand reported a 24.3% sales decline to 28,216 vehicles sold in the quarter.

GMC reported a sales dip of 7.5% to 121,437. Its Acadia midsize SUV sales plummeted 53.2% to 9,336.

Chevrolet's sales dropped nearly 20% to 344,033. Sales of the 2022 Chevrolet Bolt were down 96% to 358 after GM halted production of the cars at Orion Assembly plant late last year to focus on fixing defective batteries in 140,000 Bolt EVs and EUVs from 2017-22 model years in a global recall.

On a brighter note, besides strong pickup sales, Chevrolet saw sales of the Corvette sports car surge 33.3% to 8,811. The volume is small, but it's a high-profit and high-profile vehicle for the brand.

Hummer sales

In the quarter, GM sold 99 of the new 2022 GMC Hummer EV pickup.

At a media event in Phoenix earlier this week, Buick and GMC boss Duncan Aldred said GM expected small sales for the Hummer in the quarter in part because GM was still using preproduction materials to build it until recently.

Ramping up production is crucial because GM's EV sales will be determined by production, analysts said.

"EVs are very much niche models, at least the Hummer," Krebs said. "Everything depends on what can be produced."

GM CEO Mary Barra told analysts during a fourth-quarter earnings call that GM plans to sell 400,000 EVs before January 2024. Those sales will come from the Hummer EV and SUV, the 2024 Chevrolet Silverado EV, the now-being-built 2023 Cadillac Lyriq SUV, the 2022 Chevrolet Bolt EV and EUV and the yet-to-be-revealed 2024 Equinox EV.

GM also has its new business, BrightDrop, which lists FedEx and Walmart as customers. It makes and sells the EV commercial vans EV600 and smaller EV410 at GM's CAMI plant in Ontario. Those vans will add to GM's EV sales going forward.

The Hummer is being built at Factory ZERO in Detroit and Hamtramck. It is the first EV to use GM's Ultium platform, which is a proprietary battery cells platform that propels the EVs. The Hummer is a flagship vehicle for GMC and GM.

GM has received more than 66,000 reservations for Hummer pickups and SUVs, higher than initial expectations, said Chad Lyons, a GMC spokesman. Also higher than expected, the number of people converting their reservations into orders to buy the Hummer pickup — about 95%.

The limited “Edition 1” Hummer being built now starts at $110,295, but GM will offer versions priced about $80,000 to $100,000 in the future. Aldred told reporters that GM will increase production of the Hummer pickup throughout this year and it will be at full line rate in the fourth quarter.

More: GM is building pre-production Hummer EVs at Factory ZERO, hiring to follow

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Free Press staff writer Mark Phelan contributed to this report.

Contact Jamie L. LaReau: 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.

This article originally appeared on Detroit Free Press: Toyota beats GM again in first quarter sales