Shortage of computer chips causes problems for auto industry

Computer chip shortage creating problems for the auto industry

DETROIT – A shortage of computer chips is causing problems for the auto industry.

General Motors has warned that it is likely to lose around $2 billion this year as a result. Ford had to slow down the F-150 production for a week. The shortage is now spreading across to other industries.

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For the auto industry the problem is a supply and demand issue created by manufacturing. Because of the issue many automakers are having to slow or stop production to put the chips in vehicles.

GM had to shut down its Fairfax, Kansas plant that builds the Cadillac XT4 and the Chevy Malibu. It also closed the Cami assembly plant in Canada where they build the Chevy Equinox. The San Luis Potosi plant in Mexico was also closed.

In Windsor, Ontario, Stellantis closed its minivan plant where it makes the Pacifica. Toyota had to close a plant in Arlington, Texas where they build the Tundra. It’s also closing the Tennessee and Missouri plants where they make Tundra parts.

Guidehouse Insights Auto Analyst Sam Abuelsamid said after automakers cancelled a lot of orders during the early days of the COVID pandemic, the chip makers moved to make more chips as schools needed more computers for in-home learning.

“A manufacturer may have the option of maybe not just building certain trim levels that have certain options. Or, if it’s something like a powertrain where every vehicles got it 100 percent of your vehicles have that powertrain chip, then you’re basically stuck,’ he said.

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About the Authors:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.

Kayla is a Web Producer for ClickOnDetroit. Before she joined the team in 2018 she worked at WILX in Lansing as a digital producer.