Since the scarcity of chips began, automakers have been using their chips to build their most popular vehicles. But now, Ford (F) and Stellantis struggle to deliver completed pickups to their dealers.
“They have tried very hard to award the chips they get to vehicles with high demand and profitable margins,” said Michelle Krebs, senior analyst at AutoTrader. “But it’s clear that this is the challenge now.”
Ford has announced that it has started building the country’s top-selling vehicle, the F-150 pickup, without any chips it needs. This will park the unfinished trucks while waiting for the missing chips to arrive, rather than sending them to dealers.
The company also temporarily stopped one of the three shifts at the Kentucky Truck plant, where the SUVs were built with a large expedition and Navigator, as well as the Super Duty pickups.
Stellantis, the carmaker formed by the merger of Fiat Chrysler and the French PSA Group, is doing the same with the Ram 1500 Classic pickup, a base version of the truck.
The good news for Stellantis is that sales of Ram pickups may not be bad, or at least not immediately. According to Krebs, Stellantis has an excess supply of the Ram 1500 Classic – worth about 143 days. This can be compared to an average of 59 days of stock for full-size pickups across the industry.
The global scarcity deficit
The shortage of chips has hurt carmakers worldwide. Car manufacturers slashed computer chip orders early last year when the pandemic caused temporary factory closures and hampered car trading and production. Electronic manufacturers, which had strong sales during the pandemic, happily picked up the excess supply.
But when car sales bounced back sooner than expected, it left the industry struggling with a shortage of chips.
The average car contains between 50 and 150 chips. Some chips can be used in many different models, which has enabled the car manufacturers to keep production of trucks and sport utility vehicles so far. But there are other discs that are specific to each type of vehicle.
General Motors and Ford have both warned investors that the shortage of chips will reduce their earnings by more than a billion dollars by 2021.
Krebs said carmakers are also experiencing problems due to delays in the country’s ports, which prevent container ships from unloading car parts. These problems could limit U.S. car sales, she said.
“The supply chain is pretty fragile,” she said. “We have a conservative sales forecast due to the tight inventory.”
GM (GM) has closed three plants in North America since early February, and the automaker said they will remain closed at least until next month. These plants do not build large pickups or sport utility vehicles, but the shortage of chips has led GM to tamper with its large vehicle range as well.
Last week, GM confirmed that some versions of the Chevrolet Silverado and the GMC Sierra would be built without a fuel management module that improves mileage by about 1 mile per liter. After the fact, the chips cannot be added to the trucks, so they are sent to dealers without chips.
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