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GM pauses building pickups as covid surge disrupts computer chip supply

Mark White by Mark White
August 19, 2021
in Supply Chain
0


Large pickups and SUVs are automakers’ best-selling and most profitable vehicles. GM and other automakers have tried to keep making them, shifting their supply of available chips away from less popular vehicles.
But as the Delta variant takes hold across the globe, shutdowns and restrictions are coming back, throwing the supply chain into more chaos.

“These most recent scheduling adjustments are being driven by temporary parts shortages caused by semiconductor supply constraints from international markets experiencing Covid-19-related restrictions,” said GM. “We expect it to be a near-term issue.”

GM (GM) said it will halt production for a week starting on July 26 at its Fort Wayne, Indiana, assembly plant that builds the Chevrolet Silverado 1500 and GMC Sierra 1500 models.
Car sales rise, even as chip shortage limits supply

It will also reduce the Flint, Michigan, assembly plant to one shift rather than its normal three shifts during that same week. It will also halt production at its Silao Assembly plant in Mexico. Flint builds the heavy-duty versions of the Silverado and Sierra pickups, while Silao builds the Silverado 1500 Cheyenne for the Mexican market as well as the Sierra 1500.

The Covid-19 suppy chain issues are not limited to GM or to computer chips. Reuters reported that Toyota (TM) had to shut three plants in Thailand as well as a plant in Japan because of supply chain issues caused by the pandemic. Honda also will shut production at its main plant in Japan, Reuters reported.
Automakers’ chip shortages started a year ago. Car sales fell sharply during the pandemic and automakers cut back their orders for chips and other parts. They didn’t expect demand to return quickly. But sales rebounded faster than expected, leaving car companies without the chips they needed.

Automakers will be forced to cut production by 3.9 million vehicles worldwide in 2021, costing them $110 billion in lost revenue this year, according to a chip shortage analysis by consultant AlixPartners.

The tight supplies of new vehicles helped to drive up the price of both new and used cars to record levels in the past few months. But that has been a bigger boon for auto dealers, who are independently owned, than the automakers themselves.



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Mark White

Mark White

Mark White is the editor of the ProcurementNation, a Media Outlet covering supply chain and logistics issues. He joined The New York Times in 2007 as an commodities reporter, and most recently served as foreign-exchange editor in New York.

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