GM keeps on trucking, even with missing parts

DETROIT — As the global semiconductor chip shortage lingers on, General Motors has found a way to do what some in the industry have said is impossible: Build — and sell — a vehicle with a missing part.

The automaker last week said it would assemble certain 2021 light-duty full-size pickups without an active fuel management or dynamic fuel management module because of the chip shortage.

Affected models are the Chevrolet Silverado and GMC Sierra equipped with the 5.3-liter EcoTec3 V-8 engine with both the six-speed and eight-speed automatic transmission. GM did not disclose the volume of vehicles involved.

“I’m one who’s always said, ‘You can’t build the vehicle if you’re missing one part,’ ” Doug Betts, president of the automotive division at J.D. Power, told Automotive News. “In this case, GM has redesigned the vehicle in effect so that it doesn’t need this one part.”

Since the chip shortage began hampering production this year, GM has consistently said it would prioritize full-size pickup and SUV production. GM has idled some plants, but none that make full-size pickups or SUVs.

“We continue to leverage every available semiconductor to build and ship our most popular and in-demand products,” GM spokesman David Barnas said.

GM last month said the shortage could cut this year’s earnings by as much as $2 billion.

Meanwhile, Ford Motor Co., Nissan Motor Co., Volvo Cars and other automakers are pressing pause on some production as the shortage continues.

GM’s active and dynamic fuel management technologies — generically known as variable displacement or cylinder deactivation — use fewer engine cylinders during certain situations such as highway driving.

Building the pickups without the module will reduce fuel economy by 1 mpg, GM said. The automaker retested the pickups for EPA certification without the module.

Although lower fuel economy could put GM at a disadvantage relative to competitors, deciding between maintaining a flow of highlyprofitable pickups to dealerships or losing 1 mpg in fuel economy was likely a clear choice for GM, said Bill Rinna, director of vehicle forecasts for the Americas at LMC Automotive.

“While fuel economy is important to consumers, there are pickup attributes other than fuel economy that typically weigh in higher when deciding to buy a pickup truck,” Rinna said. “They just want to get their high-profitable pickup trucks into the market and not lose a sale.”

Building the pickups without the module is expected to be a temporary fix, only affecting the remaining 2021 models, but GM said the modules cannot be added to those vehicles later. Instead, GM plans to credit affected customers $50.

The decision could signal that GM sees an end to the shortage, said Stephanie Brinley, principal automotive analyst at IHS Markit. GM is unlikely to build the pickups without the fuel management modules for the 2022 or 2023 model years, she said.

“They might be at the point where … if they do this, they can get through” the rest of the model year, she said.

GM spokeswoman Michelle Malcho told Reuters that GM’s move would not have a major effect on the automaker’s U.S. corporate average fuel economy numbers.

According to the EPA, the lack of modules does not affect the pickups’ emissions of nitrogen oxides or hydrocarbons. GM has promised to account for the difference in greenhouse gas emissions and fuel economy in compliance reporting, the agency said. The EPA also plans to conduct follow-up testing.

Ford last week said it would build some F-150 pickups and Edge crossovers without certain electronic modules because of the semiconductor shortage and February’s severe winter weather. But instead of selling them to consumers that way, the automaker will hold the vehicles until the missing modules are available and can be installed.

The needed parts support basic functions such as windshield wiper motors and infotainment features, Ford spokeswoman Kelli Felker said.

Ford’s move matches the pattern of other automakers in the wake of previous supply disruptions, said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich. In the past, automakers have made vehicles with missing parts, parked them, put the parts on later and then shipped them to dealerships, as GM plans to do with some other models.

Its strategy of modifying the vehicle to permanently go without a part and altering the fuel economy, she said, is “really unusual.”

“It points out how semiconductors are a strategic supply” and highlights the need for automakers to have more strategic relationships with chip suppliers, Dziczek said.

Automakers in similar situations also will make decisions to preserve profitability and meet vehicle demand, but GM’s move was an extreme solution, Brinley said.

“It strikes me as a difficult decision to keep the pickup trucks moving,” she said. “I don’t feel like this is a harbinger of what everyone will do going forward.”

Read More: Auto News


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