Large pick-ups and SUVs are the best-selling and most profitable vehicles of automakers. 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 around the world, closures and restrictions return, plunging the supply chain into further chaos.
“These most recent programming adjustments are due to temporary parts shortages caused by semiconductor supply constraints in international markets facing restrictions related to Covid-19,” GM said. “We expect this to be a problem in the short term.”
DG (DG) announced that it will halt production for a week starting July 26 at its Fort Wayne, Indiana assembly plant, which builds the Chevrolet Silverado 1500 and GMC Sierra 1500 models.
It will also reduce the Flint, Michigan assembly plant to one shift instead of its normal three shifts in the same week. It will also stop production at its Silao assembly plant in Mexico. Flint builds the rugged 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 problems of the Covid-19 supply chain are not limited to GMs or computer chips. Reuters reported that Toyota (MT) had to close three factories in Thailand as well as a factory in Japan due to supply chain issues caused by the pandemic. Honda will also shut down production at its main plant in Japan, Reuters reported.
The chip shortages among automakers started a year ago. Car sales fell sharply during the pandemic, and automakers cut orders for chips and other parts. They didn’t expect demand to return quickly. But sales rebounded faster than expected, leaving automakers 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 supply of new vehicles has helped drive the price of new and used cars to record levels in recent months. But it has been a bigger boon for auto dealers, who are independent owners, than for the auto manufacturers themselves.