Chip Shortage “Worst Crisis” Supply Chain Has Ever Seen
The automotive industry is quite clearly struggling to cope with the ongoing semiconductor chip shortage brought on the pandemic. Ford, GM, and Stellantis are currently limited production of vehicles across nearly every segment right now as the supply chain continues failing to meet their needs for automotive-grade silicon. And while the automakers have come together to ask the federal government for assistance in this matter, things aren’t looking too bright at the current moment. In fact, a new report from Fox Business suggests that this issue is going to continue to persist for quite a bit longer than was initially expected. General Motors President Mark Reuss spoke with the publication about the issue, highlighting just how tenuous things are getting.
“The microchip crisis is probably the worst crisis I’ve seen in the auto industry, at least in my career, in terms of supply chain,” said Reuss in an interview with Fox Business.
By all accounts, this is an accurate estimation of things from GM’s president. The light-vehicle inventory in the U.S. is currently at its lowest figures in over a decade, with a mere 2.4 million vehicles available at the end of last month. While General Motors themselves have tried to work through the issue by building some trucks without certain modules due to the semiconductor chip shortage. Regardless, the company has had no choice but to stall production at a number of their facilities. The Lansing Grand Rapid Assembly plant for example will have been closed for 49 days by the time production starts again on May 3. This sort of closure has taken place in order to protect the profit-driving trucks and the line of GM full-size SUVs. In fact, the SUVs are the only GM vehicles that have been built at their planned rate during this fiasco.
According to the Fox report, a poll from GlobalData found that 47 percent of 100 industry professionals believe that the semiconductor chip shortage will stretch until the end of the year, while 32 percent believe it will extend into 2022. Both scenarios are quite grim already, but other people in the industry have stated that the issues could extend for much longer than that. The impact that sort of timeline could have on the auto industry is tremendous.
“We are asking for our fair share of automotive microprocessors right now, nothing more, and that would really help and we’re working really hard on getting that,” said Reuss.
Interestingly enough, dealerships appear to be having a bit of a better time with the chip shortage. More specifically, dealers are reporting record profits as a result of inflated pricing brought on by supply shortages. Buyers are worried about future inventory issues, and are willing to pay whatever dealers are asking in order to secure a new vehicle. The issues persists on the used car market as well, where values have skyrocketed as a result of the production issues taking place. So while automakers and customers alike are losing big during this supply chain failure, money is being made. Not exactly the sort of thing folks like to hear about, but nothing surprising nonetheless.