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GM extends vehicle production cuts into mid-March due to global chip shortage

DETROIT — General Motors said on Tuesday it was extending production cuts at three North American plants until at least mid-March due to the global semiconductor chip shortage, while vehicles at two other factories would only be partially built. GM, whose shares dipped 1% after the announcement, did not disclose the impact volumes or say which supplier and vehicle parts were affected by the chip shortage. But it said it would focus on keeping production running at plants building its highest-profit vehicles, full-size pickup trucks and SUVs. GM said it intended to make up as much lost production as possible once the shortage chip eased. "Semiconductor supply remains an issue that is facing the entire industry. GM's plan is to leverage every available semiconductor to build and ship our most popular and in-demand products," GM spokesman David Barnas said. GM said it was extending downtime at its U.S. plant in Fairfax, Kansas, its Canadian factory in Ingersoll, Ontario, and its Mexican facility in San Luis Petosi until mid-March when it would reassess the situation, he said. In addition, GM would build but leave incomplete for final assembly vehicles at Wentzville, Missouri, and its Mexican plant at Ramos Arizpe. GM vehicles affected by the idled plants include the Chevrolet Malibu sedan, Cadillac XT4 SUV, Chevy Equinox, and GMC Terrain SUVs. Vehicles to be left incomplete for now included the Chevy Colorado, GMC Canyon pickups and Chevy Blazer SUV. This week, GM had said it was idling the three factories where it has now extended downtime and said it would halve production at a plant in South Korea. The chip shortage has affected many automakers, including Toyota, Volkswagen, Stellantis, Ford, Renault, Subaru, Nissan, Honda and Mazda. Asian chipmakers are rushing to boost production but say the supply gap will take many months to plug. German chipmaker Infineon said the shortage would get worse in the near term. The chip shortage is expected to cut global output in the first quarter by more than 670,000 vehicles and last into the third quarter, IHS Markit said. AutoForecast Solutions estimated total lost production this year could reach 1 million vehicles. Honda and Nissan said on Tuesday they would sell 250,000 fewer cars in total this financial year due.

Chevy, Lincoln dealers say they still want sedans

Detroit automakers have famously turned their backs on sedans as they make the strategic bet to double down on money-making trucks and SUVs, but dealers for at least two American brands are giving the companies contrary signals. In separate recent interviews with leading national dealer councils for Chevrolet and Lincoln, Automotive News reports that both brands’ dealers still see a need for cars. The publication published a Q&A interview with Mike Bowsher, chairman of the Chevrolet National Dealer Council, who said Chevy dealers managed to hold onto market share last year despite the phase-out of the Cruze compact sedan and hatchback, thanks to products like the Spark and Sonic subcompacts and the Trax and Equinox crossovers. But, he acknowledged, “We do feel like we could use a car, especially in the low-MSRP range.” The comments follow similar recent comments from Tom Lynch, who chairs the Lincoln National Dealer Council. He told AN, “If weÂ’re not in segments where there is still a good amount of business, I think the company and the dealers lose out.” The Cruze was one of the victims of GMÂ’s November 2018 announcement of plant closures, with production having ceased with the closure of GMÂ’s Lordstown, Ohio assembly plant last year. GM sold 47,975 Cruzes in 2019 but a healthy 142,617 in 2018. At Lincoln, Lynch said the council has been telling the company it needs to stick with the sedan segment, despite plans to kill the MKZ sedan in the coming months and unconfirmed reports that the Continental isnÂ’t long for this world, either, despite the buzz of the suicide-door Coach Door Edition, shown in the photo above. Lincoln sold 17,725 MKZs and 6,586 Continental sedans in 2019, down a combined 15%, but still good for almost 22% of overall Lincoln sales. It's worth noting that Lincoln competes in a luxury segment that still expresses allegiance to four- and two-door cars. Even Cadillac, its cross-town rival, is staying active with the upcoming CT5 and CT4 sedans. Lynch pointed to Tesla as evidence that strong sedan products can resonate with consumers, though he conceded that “What that looks like for Lincoln going forward, IÂ’m not sure of.” For now, anyway, Chevy still offers the Sonic and Spark subcompacts, the latter of which saw sales climb 32.5% in 2019 to 31,281 (Sonic sales fell nearly as steeply).

5 reasons why GM is cutting jobs, closing plants in a healthy economy

DETROIT — Even though unemployment is low, the economy is growing and U.S. auto sales are near historic highs, General Motors is cutting thousands of jobs in a major restructuring aimed at generating cash to spend on innovation. It's the new reality for automakers that are faced with the present cost of designing gas-powered cars and trucks that appeal to buyers now while at the same time preparing for a future world of electric and autonomous vehicles. GM announced Monday that it will cut as many as 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles. The reductions could amount to as much as 8 percent of GM's global workforce of 180,000 employees. The cuts mark GM's first major downsizing since shedding thousands of jobs in the Great Recession. The company also said it will stop operating two additional factories outside North America by the end of next year. The move to make GM get leaner before the next downturn likely will be followed by Ford Motor Co., which also has struggled to keep one foot in the present and another in an ambiguous future of new mobility. Ford has been slower to react, but says it will lay off an unspecified number of white-collar workers as it exits much of the car market in favor of trucks and SUVs, some of them powered by batteries. Here's a rundown of the reasons behind the cuts: Coding, not combustion CEO Mary Barra said as cars and trucks become more complex, GM will need more computer coders but fewer engineers who work on internal combustion engines. "The vehicle has become much more software-oriented" with millions of lines of code, she said. "We still need many technical resources in the company." Shedding sedans The restructuring also reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. That figure was about 50 percent cars just five years ago. GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors. "We estimate sedans operate at a significant loss, hence the need for classic restructuring," he wrote. The reduction includes about 8,000 white-collar employees, or 15 percent of GM's North American white-collar workforce. Some will take buyouts while others will be laid off.