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General Motors Co. said it would idle key truck plants for a second time in a month on semiconductor shortages, echoing moves by Ford Motor Co. and Stellantis NV as the global chip crisis continues to drain cars from U.S. dealer lots.
GM said eight of its 14 North American assembly plants will experience shutdowns this month because of chip shortages, including production of the lucrative Chevrolet Silverado and GMC Sierra pickups. Ford said Wednesday it would halt output of its top-selling F-150 truck at its Kansas City factory next week after paring production of the vehicle in Dearborn, Michigan. Last week, Stellantis confirmed production of the Ram pickup at its Sterling Heights, Michigan, plant would be down this week due to chips.
The latest round of shutdowns comes after the pace of U.S. vehicle sales slumped to 12.99 million in August, the weakest rate since May 2020, when the industry was climbing out of nationwide pandemic lockdowns, according to LMC Automotive. The chip shortage, exacerbated by COVID-19 outbreaks in Southeast Asia, is starving dealers of inventory and forcing consumers who might have bought a new car to simply buy out the lease on their existing one, said Jeff Schuster, senior vice president of forecasting at researcher LMC Automotive.
“This is taking some buyers out of the market,” Schuster said. “This would have been a 17 million unit year and probably pushing to 17.5 million if we had inventory.”
LMC now forecasts a seasonally adjusted annual rate of auto sales between 15.4 million and 15.7 million this year, still improved from 2020’s 14.5 million pace. He’s forecasting 16.8 million in 2022, with most of the recovery coming in the second half of the year.
“These most recent scheduling adjustments are being driven by the continued parts shortages caused by semiconductor supply constraints from international markets experiencing COVID 19-related restrictions,” GM spokesman Dan Flores said of the shutdowns.
GM Chief Executive Officer Mary Barra warned investors last month that the chip crisis would linger into 2022 as COVID outbreaks in Malaysia worsen shortages.
Despite supply chain headaches and dwindling inventory, automakers have largely been reaping the financial benefit of skyrocketing car prices because demand is outstripping supply. Consumers have benefited from low interest rates and lofty trade-in values, but the chip shortages may have lasting damage, Schuster said.
“Pricing is well over US$40,000 on average across the industry, incentives are at record lows, there are no deals out there,” he said. “Most of this is essentially delaying some of the recovery, but there’s an element there -- it may or may not be material -- of essentially lost recovery.”
The average price of a new car rose by US$5,059, or 14 per cent in August, the biggest increase on record, while dealers only had 23 days worth of inventory on their lots at the end of the month, analysts at JPMorgan noted in a report Thursday. Normally 60 days is considered a healthy amount.
The annual sales rate of about 13 million is “more reminiscent of a recession than a bull market,” Morgan Stanley analyst Adam Jonas wrote in an note to clients Thursday.
Ford, GM and Stellantis all saw market share drop in August while Asian rivals like Honda Motor Co. and Hyundai Motor Co., and Germany’s luxury marques BMW and Mercedes gained share, he said.
Ford’s Kentucky truck plant, which builds the Super Duty pickup, along with the Expedition and Lincoln Navigator large SUVs, is down to two shifts from three.
Stellantis also idled plants in Illinois and Windsor, Canada, that make the Jeep Cherokee and Chrysler Pacifica minivan this week and next. Its Brampton, Canada plant, which makes Dodge muscle cars, is down just the week of Aug. 30.
GM also announced the following temporary shutdowns due to chips:
- Wentzville, Missouri: Makes the midsize Chevrolet Colorado and GMC Canyon pickups; down weeks of Sept. 6 and Sept. 13
- Lansing Delta Township, Michigan: Makes the Chevrolet Traverse and Buick Enclave SUVs; down weeks of Sept. 6 and Sept. 13.
- Spring Hill, Tennessee: Makes the GMC Acadia SUV and Cadillac XT5 and XT6; down weeks of Sept. 6 and Sept. 13.
- CAMI Assembly in Canada and San Luis Potosi, Mexico: Build the Chevy Equinox and GMC Terrain; extends downtime by two weeks through Sept. 27.
- Ramos, Mexico: Chevy Blazer production cuts extended for two weeks through Sept. 13; Equinox production shutdown extended through week of Sept. 27.