Ford and GM stop production again due to parts shortage analysts warn that US car sales may fall sharply in the first quarter

Two U.S. auto giants General Motors and Ford Motor Co said Thursday that their factories in Michigan will stop production next week because of parts shortages.

GM said it would cancel production at its Lansing Grand River assembly plant next week because of a temporary shortage of parts. The factory produces Cadillac CT4, Cadillac CT5 and Chevrolet Camaro. However, GM said the shutdown had nothing to do with the chip, but did not provide other details.

Ford said on Thursday that it would suspend production at its Flat Rock assembly plant, which makes Mustang cars, next week because of a global shortage of semiconductors. The car company also confirmed that production at other North American plants will remain normal.

Ford warned last month that a shortage of chips would lead to a drop in car production this quarter. Production at its Fmuri 150 pickup plant in Kansas City was suspended for a week last month because of a shortage of chips.

GM said last week that its assembly plant in Fort Wayne, Indiana would stop production for two weeks from April 4 because of a shortage of semiconductor chips. This factory produces Chevrolet Silverado 1500 and GMC Sierra 1500 pickups.

GM shares fell 3.27 per cent on Thursday, down more than 28 per cent so far this year, while Ford shares fell 2 per cent on Thursday and more than 22 per cent so far this year, compared with nearly 6 per cent in the S & P 500 so far this year.

Us car sales may fall sharply in the first quarter

Auto industry analysts say carmakers are likely to announce a sharp drop in US sales in March and the first quarter, as persistent shortages of new cars leave buyers with little choice and are expensive.

U.S. auto sales forecasts from Cox Automotive, Edmunds and J.D. Power/LMC Automotive suggest that first-quarter sales of cars, pickups and SUV are likely to fall below 3.3 million, down more than 14% from the first quarter of 2021.

But despite the decline in sales, the price of cars is rising. Analysts at TrueCar, a US auto trading platform, say the average sales price of new cars in the US may have risen 15.4 per cent in March from a year ago to nearly $43500.

Major car companies have had to cut production because of the global chip shortage caused by the novel coronavirus pandemic, but the financial impact of the cut is partly offset by higher car prices.