General Motors will extend its temporary shutdowns at three of its assembly lines in North America because of a severe shortage of semiconductor chips used in various vehicle parts.
The production downtime is expected to shed billions of dollars off auto manufacturers' earnings this year as a global semiconductor shortage continues to deal a heavy blow on the automotive industry.
According to CNBC, the decision to extend the shutdowns at car facilities in Mexico, Kansas, and Ontario, Canada is part of measures to give more focus on production of semiconductors for the company's full-size pickup trucks and sport utility vehicles, which are its major source of profit.
GM also said its Gravatai facility in Brazil will halt operations starting next month and May.
AutoForecast Solutions estimates that the chip shortage could cause the Detroit automaker to lose output of 216,000 vehicles.
The setback and related production discontinuation are reverberating through the automotive industry.
Last month, Ford announced that it had to slash production of its F-150 because of chip shortage.
After a year of pandemic-related issues, the interruption could see GM lose earnings of up to $2 billion.
Ford estimates it could shed up to $2.5 billion.
Paul Jacobson, GM Chief Financial Officer, said chip supplies should return to normal numbers by the second half of the year, confident that the impact on the company's profit would not be so bad.
"Our intent is to make up as much production lost at these plants as possible. We contemplated this downtime when we discussed our outlook for 2021 last month," the Detroit Free Press quoted GM spokesperson David Barnas as saying.
Barnas said the company's supply-chain team is working closely with suppliers to find solution for the semiconductor problem and to lessen the impacts on GM's vehicle output.
