GM President Reuss says chip shortage is ‘worst’ auto supply issue ever as sale prices rise
April 26, 2021
Relief for the semiconductor shortage that’s been hampering global automotive production may be farther off than first hoped.
Automakers had been hoping for normalization of supplies starting this summer, but a poll of 100 industry professionals by GlobalData found that 47% think the shortages will stretch to the end of the year while 32% expect them to continue into 2022. Intel CEO Pat Gelsinger painted an even more dire picture during an appearance on Barron’s Roundtable, saying it could take two years to work through the issue.
“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.
GM has reduced the production of nearly all of its car and SUV lines to prioritize chip supply for its profitable full-size trucks and has taken to building some pickups without all of the needed chips and storing them until the parts become available to install. Only the production of its full-size SUVs — the Chevrolet Tahoe and Suburban, GMC Yukon and Cadillac Escalade — have continued at planned levels.
Reuss said automotive-grade semiconductors are different than those used in other industries, so it’s not a one-for-one substitution as their manufacture is increased to meet the shortage, which has affected every industry that requires them.
“We are asking for our fair share of automotive microprocessors right now, nothing more, and that would really help and we’re working really hard on getting that,” Reuss said.
But while automakers are feeling the pain of lost sales, car dealers are reporting record profits due to the high transaction prices they’re seeing due to the short supply.
“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.”
“Customers are coming in just saying, ‘I’ll take it, full sticker, get it ready.’ It’s nuts.”
Used cars are doing just as well for dealers. Wholesale marketplace Manheim reports the average wholesale price for a used car was $19,094 in mid-April, which was up $17,876 the prior month and $12,548 compared to April 2020 when the market was oversupplied due to the start of coronavirus lockdowns nationwide.