HOUSTON (ICIS)--General Motors (GM) has announced additional production cuts – this time to its popular Chevrolet Silverado and GMC Sierra trucks – as the global shortage of microchips stretches into its sixth month with no clear end in sight.
The US automaker said on Thursday that the latest round of production cuts is being driven by temporary parts shortages caused by semiconductor supply constraints from international markets experiencing COVID-19-related restrictions.
GM production schedule adjustments
|Site||Stop date||Restart date||models|
|Flint, Michigan||1 shift-week of 26 July||Week of 2 August||Chevrolet Silverado HD and GMC Sierra HD trucks|
|Ft Wayne, Indiana||Week of 26 July||Week of 2 August||Chevrolet Silverado 1500 and GMC Sierra 1500|
|Sialo, Mexico||Week of 26 July||Week of 2 August||Chevrolet Silverado 1500, GMC Sierra 1500 and Cheyenne (sold in Mexico)|
“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 minimise the impact to our highest-demand and capacity-constrained vehicles, including full-size trucks and SUVs for our customers,” the company said.
In addition, GM said the down time will allow the company to complete unfinished vehicles at the impacted assembly plants and ship those units to dealers.
GM said it expects these adjustments to be “a near-term issue”, but ICIS demand analysts said in June that continued strong demand combined with other associated supply chain issues make ‘hopes of a speedy resolution to the problem now seem short-sighted”.
ICIS Demand Analyst Jincy Varghese said this week that while demand remains strong, the auto industry continues to be beset by numerous obstacles, spanning supply-chain disruption of critical auto components to polymer resin.
"The shortage of semiconductor chips continues to adversely impact the sector, resulting in production cuts," Varghese said.
"Moreover, concerns remain over the more contagious Delta variant of coronavirus, including the efficacy of vaccines on mutated strains, with the potential to severely impact the industry," Varghese said.
These dynamics could create headwinds for auto sales.
"Short- to mid-term demand still looks gloomy on the back of high unemployment and lower disposable income," Varghese said.
The global shortage of microprocessors, which are used to control the engine, antilock brakes, power steering, fuel-monitoring system and heating and air conditioning in modern vehicles, arose as economies began to reopen from coronavirus lockdowns, which led to a surge in demand.
A fire in April at a Japanese plant of chipmaker Renesas added to the shortage. Renesas accounts for about a 30% share of the global market for microcontroller unit chips used in cars.
The chipmaker said on 25 June that production at the building that caught fire has returned to 100% capacity and that outgoing shipments should reach pre-fire levels around the third week of July.
Hyundai Motor Co said on Thursday in a release announcing its second-quarter earnings that it expects that on-year sales growth might slow down in the rest of 2021 amid adverse business conditions caused by the COVID-19 pandemic resurgence, as well as the unstable supply of semiconductor chips, raw material price fluctuations, and unfavourable exchange rates.
Regarding the global chip shortage, Hyundai expects the situation to gradually improve in the second half of the year, and the company plans to bolster its component inventory with sufficient orders for a year, secure additional supplies and strengthen cooperation with various semiconductor partners.
Texas Instruments said on 21 July during a conference call to discuss second quarter earnings that it continues to add incremental capacity in 2021 and first half of 2022 with additional support from the start-up of its third 300mm wafer fab production facility that will come online in the second half of 2022.
The auto industry is a major end-market for petrochemicals and contributes about a third of the raw material costs of an average vehicle.
The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethanes and MMA/PMMA.
Focus story by Adam Yanelli
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