Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GM extends production cuts due to chip shortage, Stellantis warns of lingering pain

Stock MarketsMar 03, 2021 12:45PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: Chevrolet Equinox SUVs are parked awaiting shipment near the General Motors Co (GM) CAMI assembly plant in Ingersoll 2/2

By Ben Klayman and Nick Carey

DETROIT/LONDON (Reuters) - The global semiconductor chip shortage led General Motors Co (NYSE:GM) on Wednesday to extend production cuts at three North American plants and add a fourth to the list of factories hit, and Stellantis to warn the pain could linger far into the year.

The extended cuts do not change GM's forecast last month that the shortage could shave up to $2 billion from this year's earnings. GM Chief Financial Officer Paul Jacobson subsequently said chip supplies should return to normal rates by the second half of the year and he was confident the profit hit would not worsen.

However, Stellantis on Wednesday did not give an estimate for the financial hit it expects this year from the shortage and said the issue could last into the second half of 2021.

The chip shortage, which has hit automakers globally, stems from a confluence of factors as carmakers, which shut plants for two months during the COVID-19 pandemic last year, compete against the sprawling consumer electronics industry for chip supplies.

Consumers have stocked up on laptops, gaming consoles and other electronic products during the pandemic, leading to tight chip supplies. They also bought more cars than industry officials expected last spring, further straining supplies.

GM did not disclose the impact on volumes or say which supplier or parts were affected by the chip shortage, but the U.S. automaker said it intends to recover as much of the lost output as possible.

"GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs," GM spokesman David Barnas said. "We contemplated this downtime when we discussed our outlook for 2021."

GM said it would extend downtime at plants in Fairfax, Kansas, and Ingersoll, Ontario, to at least mid-April, and in San Luis Potosi, Mexico, through the end of March. In addition, it will idle its Gravatai plant in Sao Paulo, Brazil, in April and May.

The Detroit automaker had previously extended production cuts at three North American plants into mid-March and said vehicles at two other plants would only be partially built. Following Wednesday's cuts, forecasting firm AutoForecast Solutions estimated GM could lose more than 216,000 units globally due to the shortage.

While reporting quarterly results on Wednesday, Stellantis said the chip shortage could weigh on 2021 earnings and Chief Financial Officer Richard Palmer told analysts on a conference call the financial impact was a "big unknown."

Stellantis Chief Executive Carlos Tavares said the automaker was working hard to find alternative chip supplies, but he was "not so sure" the issue would be resolved by the second half of 2021.

Ford Motor (NYSE:F) Co said last month the lack of chips could cut company production by up to 20% in the first quarter and hurt profits by as much as $2.5 billion. It had previously cut production of its top-selling F-150 pickup truck.

Some automakers, including Toyota Motor (NYSE:TM) Corp and Hyundai Motor Co, avoided deeper cuts by stockpiling chips ahead of the shortage.

Industry officials and politicians have pushed U.S. President Joe Biden's administration to take a more active role in dealing with the chip shortage.

Last week, Biden said he would seek $37 billion in funding to supercharge chip manufacturing in the United States. An executive order also launched a review of supply chains for such critical products as semiconductor chips, electric vehicle batteries and rare earth minerals.

Complicating matters was a severe winter storm in Texas last month that killed at least 21 people and led to the shutdown of several chip plants. Semiconductor industry officials said customers would face knock-on effects in several months.

GM extends production cuts due to chip shortage, Stellantis warns of lingering pain
 

Related Articles

Netflix, Las Vegas, Mortgages: 3 Things to Watch
Netflix, Las Vegas, Mortgages: 3 Things to Watch By Investing.com - Apr 20, 2021

By Christiana Sciaudone Investing.com -- Covid-19 fears are back, sending stocks lower despite really great earnings reports. Energy, financials, airlines and industrials were...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
David Lockshin
David Lockshin Mar 03, 2021 7:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Let the chips fall where they may
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email