GM to Halt Production at Several North American Plants Due to Chip Shortage -- Update

By Mike Colias and Allison Prang 

General Motors Co. will halt production at several North American factories and extend shutdowns at some others because of a protracted shortage of semiconductor chips that is disrupting the auto industry's hopes for a bounceback this year.

The auto maker said Thursday that three plants previously unaffected by the chip shortage will be idled or have output reduced for one or two weeks, including a factory in Tennessee and another in Michigan that make popular midsize sport-utility vehicles. Vehicles affected include the Chevrolet Traverse SUV and the Cadillac XT5 and XT6 SUVs.

GM also will extend closures of a Kansas City-area factory and a plant in Ontario until May 10. Both facilities have been closed since February, as GM diverts chips from less-popular models to large pickup trucks and SUVs, which are its biggest profit producers.

"GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products," a company spokesman said. So far, GM has avoided taking downtime at the four factories where it makes the company's largest pickup trucks and SUVs, he said.

CNBC previously reported GM's production cuts.

Auto makers since late last year have been grappling with a shortage of semiconductor chips, which go into software modules used to control everything from brakes to dashboard touch screens. The companies have been cutting production for months as they scramble to line up chip supplies, with executives saying the shortage could last several more months.

Fallout from the chip crunch has worsened in recent weeks in the U.S. Ford Motor Co. last week said it would deepen production cuts in North America, including idling for two weeks a factory near its headquarters in Dearborn, Mich., that makes the F-150 pickup truck, its biggest moneymaker.

The effect of the bottleneck in semiconductor supply -- output for which is concentrated in Asia -- has crimped production at virtually every major car company in recent months, including Toyota Motor Corp., Volkswagen AG, Honda Motor Co. and Stellantis NV.

The seeds of the auto industry's chip shortage were planted last spring, when auto makers and suppliers cut their production schedules as the pandemic clouded the outlook for vehicle sales.

Meanwhile, chip producers have been scrambling to keep pace with strong demand from makers of laptops, gaming systems and other electronic devices that have been in high demand, curbing the supply of automotive chips.

New-vehicle demand in the U.S. has snapped back from a pandemic lull last summer, worsening an inventory crunch at dealerships and sending car prices higher.

Shares of GM were down about 1.7% Thursday morning at $59.82 a share.

Write to Mike Colias at [e-mail] and Allison Prang at [e-mail]

(END) Dow Jones Newswires

April 08, 2021 12:10 ET (16:10 GMT)

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