GM, Ford To Temporarily Close Some Factories As Chip Shortage Worsens

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Cars parked outisde a General Motors assembly plant.
Industry analysts say COVID outbreaks have hit employees at chip factories in Asia particularly hard, forcing some plants to close.

The global shortage of computer chips is getting worse, forcing automakers to temporarily close factories including those that build popular pickup trucks.

General Motors announced Thursday that it would pause production at eight North American plants during the next two weeks, including two that make the company's top-selling Chevrolet Silverado pickup.

Ford will stop making pickups at its Kansas City Assembly Plant for the next two weeks. Shifts will be cut at two more truck plants in Dearborn, Michigan, and Louisville, Kentucky.

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.

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.

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.

The GM and Ford cuts come on top of temporary plant closures announced previously by Toyota, Nissan and Stellantis, formerly Fiat Chrysler. 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.

Additional reporting by the Associated Press.