(CU)_American multinational carmaker General Motors says it is extending temporary shutdowns at three of its North American plants owing to the global shortage in semiconductor chips.
Accordingly, GM plans to prioritise production of pickup trucks and SUVs, and will therefore extend shutdowns at car and crossover plants in Kansas, Ontario and Mexico. The company also said that there will be an extension in the shutdowns at its Gravataí plant in Brazil until May.
Previously, the three plants in North America were expected to remain closed until at least mid-March. However, now the plant in Mexico will remain shut through the end of March, while those in the US and Canada will be down until at least mid-Apil.
A week ago, GM CFO Paul Jacobson said that although the chip shortage, which is expected to shed billions off automakers’ earnings this year, has been improving, however, delays are expected in order to lower the company’s free cash flow by $1.5 billion and $2.5 billion in 2021.
“GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs for our customers,” the company said in a statement. “GM has not taken downtime or reduced shifts at any of its truck plants due to the shortage.”
After the demand for vehicles rebounded more strongly than expected, following shut downs in production to contain the pandemic, automakers and parts suppliers expressed their concern late last year, regarding a possible shortage.
According to consulting firm AlixPartners, the chip shortage is expected to cut about $60.6 billion in revenue from the entire supply chain of the global automotive industry, from automakers and dealers to their small counterparts.
Semiconductor chips are extremely important components of new vehicles, with each vehicle having hundreds of semiconductors, depending on their safety and infotainment systems.
