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Vehicle chip shortage 'worst crisis' GM president has seen in supply chain, sends prices soaring

Auto Plants Restart Delayed
Posted at 4:00 PM, Apr 27, 2021
and last updated 2021-04-27 18:44:04-04

A shortage of semiconductor chips continues to impact both automotive industry employees and those looking to buy a car. Industry analysts say the shortage could last through the end of the year and possibly into 2022.

"The microchip crisis is probably the worst crisis I’ve seen in the auto industry, at least in my career, in terms of supply chain," General Motors President Mark Reuss told Fox Business.

General Motors has idled several plants across the country in the last several weeks as the lack of semiconductors meant vehicles could not be made. They are not alone, other automakers, including Ford and Toyota, have had to cut production this year because of the global shortage of chips.

Semiconductors are used in the infotainment, power steering and braking systems, among other functions of a vehicle.

The shortage began in 2020 as multiple vehicle plants around the world shut down early in the coronavirus pandemic, and chip suppliers directed them to other industries. Now that vehicle manufacturing and purchasing has bounced back, there is a shortage of available chips.

Chips used for vehicles are different than those used for other industries, and it has taken time to ramp up production of the microprocessors.

A poll of 100 industry professionals by GlobalData found 47% think the shortages will stretch to the end of 2021, while 32% expect them to continue into next year.

While automotive plants are temporarily idle, dealerships are seeing high profits with the limited inventory.

"I'm selling about 150% of what I have on the ground," Buick-GMC dealer Mike Bowsher told Reuters. "We are selling stuff so far up in the pipeline that they're putting money down on 'in-process,' which is in the plant."

Used cars, which have been a hot commodity during the pandemic, continue to be in high demand as the number of new vehicles rolling off the line has been temporarily cut.