GM extends vehicle production cuts due to global chip shortage

DETROIT (Reuters) - General Motors Co said on Tuesday it was extending production cuts at three North American plants until at least mid-March due to the global semiconductor chip shortage, while vehicles at two other factories would only be partially built.

FILE PHOTO: The GM logo is seen in Warren, Michigan, U.S. on October 26, 2015. REUTERS/Rebecca Cook/File Photo

GM’s U.S. rival Ford Motor Co also said Tuesday that it was in limited cases parking partly assembled vehicles due to the chip shortage.

GM, whose shares dipped 1.1% after the announcement, did not disclose the impact on volumes or say which supplier and vehicle parts were affected by the chip shortage.

But it said it would focus on keeping production running at plants building its highest-profit vehicles: full-size pickup trucks and SUVs. GM said it intended to make up as much lost production as possible once the shortage chip eased.

“Semiconductor supply remains an issue that is facing the entire industry,” GM spokesman David Barnas said. “GM’s plan is to leverage every available semiconductor to build and ship our most popular and in-demand products.”

GM said it was extending downtime at its U.S. plant in Fairfax, Kansas; its Canadian factory in Ingersoll, Ontario; and its Mexican facility in San Luis Potosi until mid-March when it would reassess the situation, he said.

In addition, GM said it would build but leave incomplete for final assembly vehicles at Wentzville, Missouri, and its Mexican plant at Ramos Arizpe.

GM vehicles affected by the idled plants include the Chevrolet Malibu sedan, Cadillac XT4 SUV, Chevy Equinox, and GMC Terrain SUVs. Vehicles to be left incomplete for now included the Chevy Colorado, GMC Canyon pickups and Chevy Blazer SUV.

This week, GM had said it was idling the three factories where it has now extended downtime and said it would halve production at a plant in South Korea.

Ford’s chief product platform officer, Hau Thai-Tang, at a conference on Tuesday raised the possibility that Ford might have to park vehicles that would need parts added later because of the chip shortage. Kelli Felker, a Ford spokeswoman, later said the company was doing that “in limited cases,” but did not say what vehicles were affected.

The shortage stems from a confluence of factors as auto manufacturers, which shut plants for two months during the COVID-19 pandemic last year, compete against the sprawling consumer electronics industry for chip supplies.

Consumers have stocked up on laptops, gaming consoles and other electronic products during the pandemic, leading to tight chip supplies. They have also bought more cars than industry officials expected last spring, further straining supplies.

The chip shortage has affected many automakers, including Toyota, Volkswagen, Stellantis, Renault, Subaru, Nissan, Honda and Mazda.

VW said Tuesday it expects chip supply to remain tight in the first half of the year.

AutoForecast Solutions on Tuesday updated its estimate for lost production this year, saying the global industry could lose almost 1.3 million vehicles as a result of the shortage. GM could lose an estimated 111,450 vehicles, the forecasting firm said.

Honda and Nissan said on Tuesday they would sell 250,000 fewer cars in total this financial year due to the chip shortage.

Ford said last week the shortage was hitting production of its highly profitable F-150 pickup trucks, saying it could lose 10% to 20% of planned first-quarter vehicle production and earnings could fall by $1 billion to $2.5 billion.

Taiwan, home to the world’s largest contract chip maker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC), is at the center of efforts to resolve the shortage. U.S. officials discussed the issue with their Taiwanese counterparts last week.

Chinese officials said on Tuesday they had met with auto and chip companies, asking them to help ease the shortage. French state officials meet with auto and electronics industry leaders on Wednesday to discuss the issue.

The Mexican Automotive Industry Association (AMIA) said this week that chip shortages had hurt national auto production in January, and it would likely dampen output during the first half of 2021.

The Information Technology Industry Council, which represents technology and auto companies, wrote U.S. President Joe Biden on Tuesday urging action to address the shortage, including providing “substantial funding” to ensure there will be enough chips.

Reporting by Ben Klayman in Detroit, additional reporting by David Shepardson in Washington and Sharay Angulo in Mexico City; Editing by Chizu Nomiyama and Jonathan Oatis