BySean Tucker03/28/2022 6:55am
There’s been a crisis or two since the last time we reported on this crisis, but this crisis isn’t over.
General Motors will pause production of its Chevy Silverado and GMC Sierra at the company’s huge Fort Wayne, Indiana, factory in early April. Production will resume after two weeks. The reason? A global shortage of microchips.
Both trucks are also manufactured at other locations, so the pause won’t stop Silverado or Sierra production entirely.
Recapping the Chip Shortage
Today’s cars routinely contain 100 to 150 microchips. The tiny processors control everything from engine timing to cabin temperature. But the COVID-19 pandemic kicked off a series of events that left the worldwide automotive industry without enough chips.
When the pandemic led to travel restrictions, automakers assumed Americans wouldn’t be car shopping at normal rates for a long time. They reduced their orders for microchips and prepared to build fewer cars.
But people suddenly needed to work and attend school from home. For that, they needed lots of new internet-capable devices. Devices that also use microchips.
So chip factories continued to churn out processors when they weren’t shut down due to employee sickness. Their order books never lagged. When vaccines became readily available, and government stimulus programs helped the American economy recover, Americans went car shopping again.
But automakers couldn’t spool their production back up for lack of chips. And chipmakers couldn’t catch up with automakers’ orders.
Building new chip factories and training the workers to fill them is a time-consuming process — it can take more than two years to launch a new factory. So, the chip industry hasn’t built up new capacity yet. Orders are still backlogged. Automakers still aren’t getting as many as they would need to keep up with demand for new cars.
Situation Improving Slowly
Experts say the shortage may be over by the end of 2022. But we expect inventories of many cars to remain below normal all year — keeping prices high.
GM says the situation has improved. “This has translated into improvement in our production and deliveries during the first three months of the year,” the company said in a statement.
But some hurdles remain. Hence, Silverado and Sierra production must be temporarily trimmed.
Both of Chevy’s big trucks saw significant overhauls for the 2022 model year. The Silverado received a vastly improved interior and a new ZR2 off-road model, while the Sierra has a new off-road-oriented trim and a super-luxury Denali Ultimate model.
