Global shortages of computer chips are getting worse, causing automakers to temporarily shut down factories, including those that make popular pickup trucks.
General Motors announced Thursday it would suspend production at eight North American plants over the next two weeks. This includes two that produce the top-selling Chevrolet Silverado pickup.
Ford will cease making pickups at the Kansas City Assembly Plant over the next two weeks. Two more Dearborn, Michigan and Louisville, Kentucky truck plants will cut shifts.
These cuts will add to the already tight supply of vehicles, trucks, and SUVs at dealers nationwide. This has pushed prices up to new records. The August inventory of U.S. dealers was just below a million, 72% less than August’s 3.58 million.
Jeff Schuster, president, global vehicle forecasting, LMC Automotive (a consulting company), stated that “it now appears to have accelerated in the wrong direction.”
According to industry analysts, the new coronavirus delta has caused severe illness in some chip factories in Southeast Asia. This has forced some plants to close. This has worsened an already severe shortage of chips that had been improving in the summer.
Kevin Roberts, Cargurus.com director of industry insight, stated that “now the prospects for new sales continue to dime with the reality tight inventory will last well into 2020.”
The demand for trucks, SUVs, and other automobiles is strong but buyers are becoming frustrated by a lack of inventory, high prices, and a lack of availability. According to J.D., U.S. light vehicle sales dropped nearly 18% in August, compared to a year earlier. However, the average vehicle sold price was over $41,000, which is a record according J.D. Power.
Ford’s F-Series trucks sales fell by nearly 23% in the last month.
Schuster was forced to reduce his U.S. sales forecast to 15.7million because of the August sales slump and inventory shortages. Sales had averaged around 17 million annually before the pandemic.
Schuster stated that consumers who are in dire need of a vehicle change don’t have many options because dealer stock is so limited. Many people have abandoned the market due to difficulty finding the right vehicle for them. Others find that the price of a vehicle is prohibitive and they are unable to afford it.
GM will close pickup truck factories in Fort Wayne, Indiana and Silao Mexico for a week beginning Monday. Two weeks will be spent closing a plant in Wentzville that produces large pickup trucks and large vans. Other plants producing small and midsize SUVs are expected to remain idle for at least two weeks.
“These scheduling adjustments are driven by the continuing parts shortages caused in part by semiconductor supply constraints from international market experiencing COVID-19 related restrictions,” GM stated in a statement.
These cuts are in addition to the temporary plant closings previously announced by Toyota, Nissan, and Stellantis.
Stellantis’ Ram truck assembly plant at Sterling Heights, Michigan was shut down this week by a chip shortage. Two weeks of downtime has occurred at Stellantis’ Belvidere in Illinois small-SUV and minivan plants in Windsor, Ontario.
Toyota announced that it would reduce production in Japan and North America by at least 40% over the next two-months, resulting in a reduction of 360,000 vehicles globally in September.
Nissan announced mid-August that it would close its massive factory in Smyrna (Tennessee) due to chip shortages. Now, the closure will be for four weeks.
There’s some good news. Ford reported that its overall production increased 76% between July and August. However, it is not clear how long this trend will last.