Will Chip Shortage Dethrone GM's Sales Dominance?

Ninety years. That’s the amount of time that General Motors has led the sales charts in the U.S.

That may change this year, according to industry bible Automotive News, because of the ongoing microchip shortage.

Toyota has outsold GM in the U.S. for two consecutive quarters now, despite a September decline of 22 percent as it, too, struggled. Still, it showed a small year-over-year increase through the first three quarters.

Meanwhile, GM had its worst three months since the darkest days of the Great Recession that roiled the industry, especially the Detroit-based automakers, over a decade ago.

GM trails Toyota by about 90,000 light vehicles as it enters the fourth quarter, and it’s seeing volume numbers not seen since the 1950s.

That said, AN also reports that GM execs seem to believe that the worst of the chip crisis occurred during Q3 and has now passed, and the execs also point out that most of the plants that suffered lengthy shutdowns due to the chip shortage during Q3 will be back online in Q4.

On yet the other hand, analysts do think the crisis will continue to linger and bedevil the industry for the rest of the year, and October could be an especially tough month.

From the story:

“There’s probably more downside risk still because of the multitude of issues going on between port problems, transport problems, getting workers in plants, other parts shortages, chips,” said Jeff Schuster, LMC Automotive’s president of the Americas operations and global vehicle forecasting. “We’ve got a pretty long road before the industry gets out of this.”

Among those automakers who reported quarterly numbers last week, the industry was down around 10 percent, thanks to the chip problems. More automakers, including Ford, Jaguar Land Rover, and Mercedes-Benz are set to report sales this week.

LMC, the analyst firm quoted by AN, expects about 15 million sales for light vehicles this year. That’s still an increase over the 14.6 million from 2020. The company sees a number of around 15.7 million for 2022.

Regular industry observers will note that in the heady post-recession boom times, automakers sold about 16 million units in a given year.

With inventory down, dealers are worried more about getting cars to sell than actually selling the inventory they already have.

Toyota, for its part, touts lessons learned a decade ago during the Fukushima disaster as helping it weather the storm.

Again from AN:

“What we learned from the earthquake is we needed to carry more inventory of slow moving parts — and chips were one of the commodities we identified early on,” Carter told Automotive News via email.

Still, the sales race isn’t a foregone conclusion. Toyota tends to have a smaller inventory than GM, and the automaker told AN that it has fewer than 100,000 units either on dealer lots or in transit.

GM, for comparison, has just under 129,000 units out there, but also has five times as many dealers to spread that inventory around to.

Meanwhile, the market often sees a shift towards truck-buying through the fall and winter, and that would likely favor GM, which has a deeper bench of truck models, even in the face of Toyota unveiling a new Tundra. Toyota has also already announced production cuts for October that are not insignificant.

[Image: GM/Chevrolet]