GM extends factory downtime; incomplete cars stored amid chip shortfall

DETROIT -- General Motors is extending production cuts at three global plants through at least mid-March and building but leaving incomplete vehicles at two other factories due to the global semiconductor chip shortage.

GM on Tuesday did not disclose how much volume it would lose in its latest action or which supplier and vehicle parts were affected by the chip shortage, but said the focus remains on keeping production running at plants building its highest-profit vehicles -- trucks, crossovers and SUVs. GM said it intends to make up as much lost production as possible.

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

GM could lose an estimated 111,450 vehicles, according to AutoForecast Solutions.

GM said it was extending downtime at plants in Fairfax, Kansas; Ingersoll, Ontario; and San Luis Petosi, Mexico, through mid-March, when it will reassess the situation, he said. In addition, GM will build but leave incomplete for later final assembly vehicles at plants in Wentzville, Mo., and Ramos Arizpe, Mexico.

GM vehicles affected by the idled plants include the Chevrolet Malibu sedan along with the Cadillac XT4, Chevy Equinox and GMC Terrain crossovers, while the vehicles built for later final assembly include the Chevy Colorado and GMC Canyon pickups and Chevy Blazer crossover.

Earlier this week GM idled the three factories where it extended downtime, and said it would halve production at a plant in South Korea.

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.

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.

Perfect storm

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.

Beyond GM and Ford, the chip shortage has affected many other automakers, including Toyota Motor Corp., Volkswagen Group, Stellantis, Renault, Subaru Corp., Nissan Motor Co., Honda Motor Corp. and Mazda Motor Corp.

Asian chipmakers are rushing to boost production but say the supply gap will take many months to plug. German chipmaker Infineon said the shortage would worsen in the near term.

Cutting global output

The chip shortage is expected to cut global output in the first quarter by more than 670,000 vehicles and last into the third quarter, IHS Markit said. AutoForecast Solutions on Tuesday updated its estimate for lost production this year, saying the global industry could lose almost 1.3 million vehicles.

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 10-20 percent of planned first-quarter vehicle production and earnings could fall by $1 billion to $2.5 billion.

Stellantis said it would idle its Canadian minivan plant in Windsor, Ontario, for three weeks until the end of February.

Taiwan, home to the world's largest contract chip maker, Taiwan Semiconductor Manufacturing Co., 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 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.