General Motors is taking steps to get critical semiconductors into 20,000 new trucks it placed in inventory storage and release them to dealers sooner, GM executives said this week.
Finishing the trucks now in storage will reduce the financial impact of the semiconductor shortage on GM’s bottom line this quarter, Paul Jacobson, GM’s chief financial officer said during a virtual fireside chat organized by analysts from Credit Suisse, thanks to increased deliveries to dealers and customers in the U.S. and Canada.
Jacobson said during the virtual conference the demand for Chevrolet, Buick, GMC and Cadillac vehicles is very strong right now. Consumers have money to spend and the interest in purchasing new vehicles is very high at the moment, he added.
The global semiconductor shortage remains a complex and very fluid issue, Jacobson added. Some of the chips have become easier to find but other actually have become harder to find.
“Nonetheless, the ability of the GM teams including our dealers, has helped us find creative ways to satisfy customers has enabled GM to blunt the impact on the company’s bottom line during the second quarter,” Jacobson said.
Some of the impact could spill into the second half of the year but GM should still hit its profit target in its current guidance of net income of between $10 billion to $12 billion.
Trucks get priority
GM also announced production of the high-margin Chevrolet Silverado HD and GMC Sierra HD full-size pickups built in Flint, Michigan will increase by about 1,000 trucks per month beginning in mid-July as a result of production line efficiencies at GM’s Flint assembly plants.
GM also is stepping up shipments of Chevrolet Colorado and GMC Canyon midsize pickups built at Wentzville Assembly in Missouri by about 30,000 total units from mid-May through the week of July 5 as the team completes dynamic vehicle testing on units held at the plant due to semiconductor supply disruptions. The Wentzville plant has been closed intermittently since this past winter due to the shortage.
Smaller volumes of vehicles held at other plants also will complete dynamic vehicle testing and ship to dealers during June and July, and GM has cancelled summer vacations at “capacity-constrained” assembly plants in Michigan, Indiana, Texas and Missouri, GM said.
Oshawa set to come online
GM also is pushing ahead with plans to build full-size pickup trucks as Oshawa Assembly outside of Toronto during the fourth quarter of this year. The new accelerated timeline at the Canadian plant and incremental volume are expected to make an impact in 2022, as production ramps up.
As a result of GM’s ongoing efforts to prioritize semiconductor usage, its success in engineering solutions that maximize the utilization of chips as well as pulling ahead some projected semiconductor deliveries into the second quarter all will bolster the company’s results for the second quarter, GM executives said.
Production at certain manufacturing facilities in North America, Asia and South America will continue to be impacted by the global semiconductor shortage through June and July. As global semiconductor supply recovers, the company expects to implement similar actions in markets around the world to resume production and increase deliveries to dealers through the second half of the year.