GM, Ford halt some auto production as chip shortage worsens


MarketWatch 02 September, 2021 - 04:03pm 32 views

What GM plants are shut down?

Four of GM's US-based plants will be affected: Fort Wayne, Indiana; Wentzville, Missouri; Spring Hill, Tennessee; and Lansing, Michigan. Four other factories in Mexico and Canada will also go dark for several weeks as GM works to shore up its supply of chips. The VergeGM temporarily shuts down North American factories because of chip shortage

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

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

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

“Now the prospects for new sales for the rest of the year continue to dim with the reality that tight inventory will last well into 2022,” said Kevin Roberts, director of industry insights for

Demand for trucks, SUVs and other autos is strong, but buyers are growing frustrated due to lack 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. Power.

Sales of Ford’s F-Series trucks fell nearly 23% for the month.

The August sales dip and inventory shortages prompted Schuster to cut his U.S. sales forecast for the year to 15.7 million. Until the pandemic hit, sales had been running around 17 million per year.

Consumers who need a new vehicle don’t have many choices with dealer supplies so short, Schuster said. Some have 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 is shutting down pickup truck plants in Fort Wayne, Indiana, and Silao, Mexico, for a week starting Monday. A plant in Wentzville, Missouri, that builds midsize 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 parts shortages caused by semiconductor supply constraints from international markets experiencing COVID-19-related restrictions,” GM said in a statement.

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

Toyota said it would slash production by at least 40% in Japan and North America 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 huge factory 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 overall production rose 76% from July to August, although it’s not clear how long that would last.

The EV charging company reported its second-quarter earnings Wednesday evening. Management raised its forecast for sales for the year.

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Ford customers clamor for new F-150s — but are forced to wait amid shortage

Detroit Free Press 02 September, 2021 - 01:10pm

His F-150  experience is a highlight for Ford, which, along with other automakers, has struggled for months to meet demand. 

The same month that Seguin took home his pickup, Ford Motor Co. saw 41,000 new orders come in for vehicles — four times higher than a year ago and up from July.

Economic uncertainty, pandemic life changes and a semiconductor chip shortage has paralyzed the automotive and other manufacturing industries, but consumers still want their pickup trucks.

"The online traffic in our showroom continues to be very strong. Most customers don't walk in anymore. They reach out to us online, using chat online or sending us online messages. Salespeople are literally in communication via text, video, chat, email and messaging all the time. Traffic is super active," said Thad Szott, whose family runs Szott Auto Group in Holly.

"Inventories are still very tight but we are solving most customer needs with custom orders. Most manufacturers are prioritizing sold orders. Many Jeep orders are arriving in three weeks and Ford is even offering a $500 rebate," he said. 

Industry analyst Jon Gabrielsen said, "The fact that any automaker like Ford would be down 33% from last year when we were in the depth of COVID-19 economic impacts is clear evidence of just how brutally the chip shortage is pummeling the auto industry.” 

"Behind the scenes, we have teams working to maximize production," John Savona, Ford vice president of manufacturing and labor affairs, wrote in an internal memo to workers dated Sept. 1 and obtained by the Free Press. "Our teams are making the most of our available semiconductor allocation."

Due to the parts shortage, Louisville Assembly Plant has also canceled factory shifts this week, according to labor bulletins obtained by the Free Press.

Foreign and domestic automakers, including General Motors, have said they're cutting production to try and cope with the squeeze.

So now Ford and its competitors find themselves building vehicles to fill orders rather than fill dealer lots. It's more efficient for companies compared to having vehicles sitting on dealer lots waiting for customers.

"These are customers who are waiting for vehicles rather than vehicles on lots waiting for customers," Erich Merkle, U.S. sales analyst for Ford, told the Free Press. "It’s not a detail typically shared but it is important data point because it says vehicle demand is strong as Ford production and inventory showed strong improvement in August relative to July."

While Ford sold around 57,000 F-Series in August, the number would usually be closer to 70,000 or 80,000, he said.

Ford is the only Detroit Three automaker who shares monthly sales data. It is part of a shift toward increased transparency advocated by new CEO Jim Farley when he took the helm of Ford on Oct. 1, 2020.

While August remained challenging, sales suggest there may be hope for the future: 

"Everyone is down because of the chip shortage," Merkle said. "This is sequential growth. It indicates recovery and improvement from a bottom. For the industry, that doesn't appear to be the case. But for Ford, August was a good month relative to July."

"F-Series is a priority for us," Merkle said. "We're working to produce to the best of our ability under the circumstances and last month we improved our inventory position with our sales responding accordingly. Overall, industry inventory declined in August relative to July. At Ford, our inventory improved."

"Of our retails sales, 30% were directly filling customer orders in August," he said. "At this time last year, it was 6%. What does that mean? It gives you real efficiency. Vehicles are not waiting on customers."  

William Teears, a mortgage broker from Green Cove Springs, Florida, didn't need to wait.

He traded a Chevrolet Silverado for a 2021 F-150 in August because he preferred the interior design and the improved towing capacity needed to haul the family camper. 

"It’s just family outings that we are doing a lot," Teears said. "That's something that's important to us that we do as family."

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