An ongoing global microchip shortage will force America’s largest automaker to halt factory lines producing its most profitable vehicles next week.
General Motors will halt most North American production of its 2021 Chevy Silverado and 2021 GMC Sierra full-size pickups next week. Plants in Michigan, Indiana, and Mexico will be temporarily idled. Production is expected to resume the week of August 2.
Plants that produce the larger Silverado HD and Sierra HD will slow their production but not stop completely.
Microchip Shortage to Blame
A global shortage of microchips has rocked the automotive industry and left most automakers trimming production of at least some vehicles.
The average new vehicle contains dozens of tiny microprocessors that control everything from engine timing to cabin temperature.
Automakers cut back their orders from chip factories early in the COVID-19 pandemic as new car sales slowed. Consumers worldwide then went on personal electronics buying sprees as they stocked up on the devices they would need to work and attend school remotely.
That kept the limited number of chip factories busy. When automakers stepped up their orders to accommodate increasing sales, chipmakers couldn’t supply them quickly enough. Car factories slowed and haven’t recovered. Some estimates say they won’t until next year.
These are GM’s Best Sellers
GM’s news is significant, though, because the Silverado and Sierra are among the most profitable vehicles in the world. The two share most of their parts and are functionally different trim levels of the same vehicle. If you considered them as a single model, they’d be the world’s best-selling vehicle.
GM counts their sales separately. But, even by that standard, both make the top 10 best-selling vehicles in America with near-perfect consistency.
GM has done everything it could to keep the production of the trucks rolling. It has repeatedly stripped out less-popular features, like HD Radio and a fuel-saving cylinder-deactivation system, to keep building the trucks with fewer microchips. This week’s announcement, though, means even that strategy can’t keep the factories humming.
Halt is Temporary, Situation “Complex and Fluid”
“The global semiconductor shortage remains complex and very fluid, but GM’s global purchasing and supply chain, engineering and manufacturing teams continue to find creative solutions and make strides working with the supply base to minimize the impact to our highest-demand and capacity-constrained vehicles, including full-size trucks and SUVs for our customers,” GM spokesperson David Barnas said in a statement.
Supply constraints have helped push new car prices to record highs. Still, consulting firm AlixPartners says the chip shortage may cost automakers as much as $110 billion in lost revenue.
