GM to close 3 plants due to semiconductor shortage

GM to close 3 plants due to semiconductor shortage

General Motors has ordered a shutdown at three plants and slowed production at a fourth as it grapples with a global shortage of semiconductors.

The Detroit carmaker said that its 2021 production targets were under threat as a result.

Plants in Kansas in the US, Ontario in Canada and San Luis Potosí in Mexico will shut next week, it said on Wednesday, and it will operate its plant in Bupyeong, South Korea, at half its usual production capacity. It plans to issue weekly updates after that, adding it intends to make up as much production as possible.

“Semiconductor supply for the global auto industry remains very fluid,” GM said. “We are currently assessing the overall impact, but our focus is to keep producing our most in-demand products — including full-size trucks and [sport utility vehicles] and Corvettes — for our customers.”

Larger vehicles like trucks and SUVs are important for the North American market as they typically command higher profits than cars, and they have sold better during the pandemic.

The company had signalled last month that it was feeling the effect of constrained supply for semiconductors. The chips have dozens of uses in vehicles, including in sensors for power steering and brakes, and in entertainment systems, and they are in increasing demand as carmakers expand their electric vehicle offerings. But chipmakers prefer to sell their product to makers of consumer electronic devices, which pay more. 

GM has raised its commitment to electric vehicles in the past year. It plans to invest $27bn in electric vehicle development and sell 1m electric vehicles in 2025. Last month the company said it will stop selling vehicles that run on petrol or diesel by 2035, making it the first carmaker to establish a benchmark for the end of sales for cars and trucks with internal combustion engines.

The company said the supply problems will not affect its plans to continue electric vehicle development and production, and that it will provide more details on the impact of the semiconductor shortage when it reports earnings next week.

A growing list of carmakers have said they are curbing production and furloughing workers. Nomura estimated last month that global car output may be about 20 per cent lower than companies had planned in the first quarter.

The GM vehicles affected by the shutdowns include the Cadillac XT4, Chevrolet’s Malibu, Equinox and Trax, the Buick Encore, Holden Trax and the Opel/Vauxhall Mokka.

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