Semiconductor shortages affect more than just the computing industry. While the latest NVIDIA cards or gaming consoles may be more difficult to find, as are semiconductors, modern vehicles are also heavily reliant on built-in computers that regulate everything from onboard GPS to anti-lock braking systems, making them a critical component in the design of certain vehicles.
GM is no exception to the list of automakers that rely on computers in their vehicles, and a quarterly earnings report released on July 1 revealed that the number of unsold vehicles in GM’s inventory has nearly reached six figures. This is due to the ongoing shortage of semiconductors. While GM can build the chassis of its vehicles with all other necessary mechanical parts, it is unable to integrate them with their automated systems, rendering them undriveable.
Due to a semiconductor chip shortage, GM was forced to shut down entire North American manufacturing plants in September 2021, given that continuing to manufacture more of these unfinished cars would simply generate more deadweight for their limited inventory space. Despite the semiconductor shortage, some manufacturing plants, such as its Arlington Assembly and Flint Assembly, have continued to produce vehicles. Other automakers, such as Ford and FCA, have been idle since January 2021.
GM sales are still increasing
Despite the approximately 95,000 vehicles that cannot be sold, sales across all GM-owned brands are not expected to slow any time soon, according to the company’s earnings report. In a July 1 SEC filing report, GM stated that these vehicles will be completed in the latter half of 2022, as semiconductors return to the market. This could happen sooner because, according to reports since late April, the shortage is now due to a transportation logistics issue rather than a silicon supply issue.
GM stated in its report that the third quarter could provide a significant boost to its market share due to rising demand for its vehicles. Sales figures in the commercial, government, and rental sectors increased by 29 percent year on year, according to the company.
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The automaker broke down its projections further, claiming that commercial demand for midsize pickups increased by 65 percent, while other vehicle groups increased by 12 to 14 percent. The report also mentioned electric vehicles. In the second quarter of 2022, over 7,300 electric vehicles were sold, including the GMC Hummer EV Pickup, Chevrolet Bolt EV, and BrightDrop Zevo 600 van. However, if not for the semiconductor chip shortage, these sales figures might have looked more promising for the future of EV. As of June 30, the company reported 247,839 vehicles in its collective inventory (or about 152,839 after subtracting the 95,000 unfinished vehicles), many of which were already on their way to retailers.