GM cuts production in eight North American plants amid chip shortages

The global shortage of computer chips is getting worse, forcing automakers to temporarily close factories, including those that build popular pickup trucks.

General Motors announced Thursday that it would stop production in eight North American plants for the next two weeks, including two that make the company's top selling Chevrolet Silverado pickup.

Ford will stop making pickups at its Kansas City Assembly Plant for the next two weeks. Shifts will be cut at two additional truck plants in Louisville, Kentucky and Dearborn, Michigan.

The cuts will compound an already record shortage of cars, trucks and SUVs on dealer lots nationwide that have pushed prices to short levels. Automakers reported that U.S. dealers had just under a million new vehicles on their lot in August, 72% less than the 3.58 million in August of 2019.

It now appears to be heading in the wrong direction, said Jeff Schuster, president of global vehicle forecasting for LMC Automotive, a consulting firm.

Industry analysts say the novel variant of delta coronavirus has hit employees at chip factories in southeast Asia hard, forcing some plants to close. That's worsened a chip shortage that started to improve earlier in the summer.

Now the prospects for tight sales continue to dim with the reality that new inventory will last well into 2022, said Kevin Roberts, Director of Business Intelligence for Cargurus.com.

Demand for trucks, SUVs and other autos is strong, but buyers are growing frustrated due to shortage of inventory and high prices. U.S. light vehicle sales fell nearly 18% in August compared with a year ago, while the average vehicle sale price hit over $41,000, a record, according to J.D. Sales of Ford's F-Serie trucks fell nearly 23% for the month.

The August sales dip and inventory shortages caused Schuster to cut his forecast of U.S. sales for the year to 15.7 million. Until the pandemic hit, sales had been run around 17 million annually to date.

Consumers who need a new vehicle don't have many choices with dealer supplies so short, Schuster said. Some left the market because they can't find anything that meets their needs. For others, pricing is through the roof so they can't afford it and aren't willing to spend what it's going to cost to get that vehicle. GM will stop auto plants in Silao, Mexico, and Fort Wayne, Indiana, for one week starting Monday. A plant in Wentzville, Missouri, that builds middle pickups and big vans will close for two weeks. Other plants that make small and midsize SUVs will be idled for two weeks or longer.

These recent scheduling adjustments are being driven by the continued components shortages caused by COVID - 19 reduced supply from semiconductor markets experiencing COVID - related restrictions, said GM in a statement.

Stellantis has shut down its Ram truck assembly plant in Sterling Heights, Michigan this week due to the chip shortage. The company's small-unit capacity plant in Windsor, Ontario, and a minivan capacity plant in Belvidere, Illinois are down for two weeks.

Toyota said it would slash production by at least 40% in Japan for the next two months, cutting production by 360,000 vehicles worldwide in September alone.

Nissan, which announced in mid-August that Chip shortages would force it to close its gigantic facility in Smyrna, Tennessee, for two weeks until Aug. 30, now says the closure will last four weeks, until Sept. 13.

There is a little good news. Ford said its total production rose 76% from July to August, although it s not clear how long that would last.