General Motors will stop making most of its full-size pickup trucks for a week starting Monday. It’s another sign that the auto industry continues to struggle with the year-long global computer chip shortage.
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.”
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.