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Amid highly-publicized semiconductor shortages that have hindered vehicle production levels, General Motors (GM) reported that Q2 vehicle sales jumped by 40% yr/yr with notable strength seen across a number of models. The bullish news doesn't come as much of a surprise, though, since it's widely understood that the auto market is on fire right now.

For it's part, GM announced in early June that it expects first half financial results to be significantly better than the guidance it previously provided. Specifically, GM originally forecasted 1H adjusted EBIT of ~$5.5 bln in its Q1 earnings report. On June 16, the automaker sharply boosted that outlook to $8.5-$9.5 bln.

There are a number of positive factors that are fueling GM's strong performance.

From a broader perspective, low interest rates, stimulus money, record highs for the stock market, robust consumer spending levels, and an improving labor market are all underpinning a very healthy environment. Additionally, many people are still avoiding public transportation due to health concerns, pushing them to purchase their own vehicles.

These items aren't only lifting vehicle unit sales higher, but they're also driving demand higher for more expensive cars, boosting margins higher for GM and its peers. In particular, sales for pickup trucks and SUVs have soared recently.

Across all versions, Chevy Silverado sales were up 34.5% in Q2 to 164,731 vehicles, while Suburban and Tahoe sales climbed by 90.6% and 74.3%, respectively. Bolstered by a 126.3% surge in Yukon sales, GMC registered its best Q2 and 1H since 2005.

Given the rising interest in and push towards electric vehicles (EVs), GM's progress in the EV market is closely monitored. The company has not been coy about its intentions to become the market leader in the North American EV market. When GM raised its 1H guidance in mid-June, it also announced that its raising its 2020-2025 EV and autonomous vehicle (AV) investment commitment to $35 bln from $20 bln.

So far, GM's expansion into the EV market is working out quite well. In Q2, sales of Bolt EV/Bolt EUV launched higher by 350.1% to 11,263 vehicles.

As the company continues to rollout its EV strategy, which includes 30 new vehicle launches by 2025, an improving economy and tight inventory levels should continue to support solid growth. Lastly, GM expects the broad-based momentum to continue, commenting that it anticipates strong demand in 2H21 and into 2022, even as the global chip shortage persists.