[Asia Economy Reporter Yujin Cho] American General Motors (GM) has announced an extension of the temporary shutdown of three North American plants due to the shortage of automotive semiconductor chips, according to US economic media CNBC and others on the 3rd (local time).
GM stated in a press release that it will extend the temporary closure of three assembly plants located in Fairfax, Kansas, USA; Ingersoll, Ontario, Canada; and San Luis Potos?, Mexico.
The company did not specify the exact date for resuming operations following this additional extension. GM had previously decided last month to temporarily shut down these three plants and announced a suspension of operations until mid-month.
GM also added that the Gravata? plant in Brazil may also halt operations in April and May.
Reaffirming its earlier forecast of an annual loss of $2 billion (approximately 2.2 trillion KRW) this year due to the semiconductor shortage, GM said, "We are confident that the semiconductor supply shortage will return to normal levels before the second half of this year, and the scale of losses will not increase further."
GM plans to minimize profit impact by adjusting production plans to focus on highly profitable popular models such as full-size trucks and sport utility vehicles (SUVs).
In addition to GM, major automakers including Stellantis, Ford, Toyota, Volkswagen, Nissan, and Honda are also experiencing production disruptions due to the semiconductor shortage.
Stellantis stated during its quarterly earnings conference call that the semiconductor chip shortage will affect its full-year results but did not disclose specific production cut estimates. Stellantis has temporarily suspended operations at its Windsor plant in Canada.
Carlos Tavares, CEO of Stellantis, said, "The semiconductor supply shortage is an industry-wide issue. We are working to find alternative chip supplies, but we do not expect the problem to be resolved before the second half of this year."
Honda and Nissan have announced that vehicle sales for this fiscal year are expected to decrease by 250,000 units, and Ford has also announced that vehicle production in the first quarter of this year is expected to decline by up to 20% compared to the same period last year due to semiconductor supply shortages.
The industry’s semiconductor shortage stems from the fact that immediately after the COVID-19 outbreak last year, automobile demand declined, leading semiconductor manufacturers to reduce production of automotive semiconductors and focus mainly on semiconductor products related to information technology (IT), which benefited from lockdowns and the spread of remote work.
Most automakers, fearing a drop in consumer demand at the start of the COVID-19 crisis, also reduced parts orders to keep inventory low, which exacerbated production disruptions.
According to market research firm IHS, global automobile production is expected to decrease by about 1 million units in the first quarter alone due to semiconductor supply disruptions. Consulting firm AlixPartners predicts that the resulting revenue loss in the automotive industry will reach $61 billion this year.
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