GRAND RAPIDS, Mich. (WOOD) — These are tough times for the auto industry.
Ford and General Motors said Thursday they will temporarily halt production at two Michigan plants due to parts shortages. Ford is temporarily closing its Flat Rock plant, while GM is halting production at its Lansing plant.
In a statement to News 8, GM said, “Due to a temporary shortage of parts, production at Lansing Grand River Assembly will be canceled for the week of April 4. Production is expected to resume Monday, April 11.” .
gm said WLNSNews 8’s sister station Lansing said the shutdown was not due to semiconductors or Russia’s war with Ukraine, but it wouldn’t say which part the facility is missing.
This isn’t the first time either company has had to suspend production in the past year. Ongoing issues are causing auto dealerships — like Betten Imports in the Grand Rapids area — to run out of inventory.
David Kolean, Volkswagen’s sales manager for Betten Imports, said “every month is a rollercoaster.”
“You go from a few cars to none to a few,” he said. “It’s just up and down.”
Betten Imports relies on a factory in Chattanooga, Tennessee for the Volkswagen Atlas. It has been closed several times, most recently for over a month.
“It’s important because Atlas accounts for nearly half of our sales,” Kolean said.
Mike Wall analyzes the automotive industry for S&P Global Inc.
“All you have to do is go to a dealership and it’s pretty sparse,” Wall said. “You have several used vehicles in the foreground, and maybe a few new ones, if you’re lucky.”
This is not a new problem. Factories have closed intermittently for months, putting a lot of pressure on dealers. The problems are expected to persist.
“We’re talking well into 2023 — or dare I say, maybe even a bit later — before we really see stocks improve significantly,” Wall said.
A global shortage of microchips is partly to blame.
“The average car has 2,000 to 3,000 microchips,” Kolean explained. “It’s an important part of the vehicle. Without them we cannot have heated seats and much more. A car drives over it all.
It’s a problem that Wall says continues to plague the industry despite “sequential improvement.” Wall said the number of chips per vehicle has doubled since 2017.
“Our biggest challenge right now in North America remains semiconductors and then the broader supply chain,” he said. “It’s not just a Ford problem, it’s not just a GM problem, it really transcends all automakers.”
But that’s far from the only problem.
“It’s compounded by labor shortages, component shortages, transportation issues to get things on time as well,” Kolean explained. “It’s the perfect storm.”
Even if factories reopen quickly, Wall said the damage may be long-lasting.
“When these factories collapse like that, especially at the semiconductor level, you lose that work-in-progress inventory that you’re working on at that exact moment,” he explained. “That ripple effect is starting to be felt in the industry.”
He said the recent earthquake in Fukushima, Japan affected a microchip maker there.
“They had three factories that were hit,” he said. “Even though (they) came back online after only a few days of being out of action as they assessed the situation, again that ripple effect is starting to be felt in the industry.”
It’s also “very difficult” to get a new vehicle right now, Wall said.
“Even ordering vehicles is now a challenge according to the automaker,” he said. “In some cases, some automakers put the pause button on controls, even custom controls.”
If you want a car right now, Wall said to do your research, be flexible with the vehicle you want, and even be willing to drive out of state to get it.
“It may have been more extreme options in the past,” Wall said. “But we’re in extreme territory when it comes to vehicle availability.”