UAW Strike Threatens Chevrolet Silverado Supply
The last General Motors truck assembly plant running while the UAW/GM strike enters its fourth week has been shut down. Automotive News said the Silao, Mexico, plant had to stop production due to parts shortages. Analysts say dealerships have only about two weeks left before they start seeing a reduction in supplies of Chevrolet Silverados and Colorados, as well as their GMC counterparts. As October is advertised as “Truck Month” in a yearly Chevrolet advertising campaign, the irony has not gotten past GM.
Truck Supplies Dwindling Fast
While GM initially said it had a large supply of vehicles ahead of the strike as it cranked out the extra product to weather the expected strike, now it says its truck supplies are dwindling. GM has a 90-day supply of pickups overall with 60-day supplies considered normal.
As truck popularity between Ford, GM and Ram has been used for decades as a gauge in marketing and advertising, dropping to third place would be further punishment for GMC and Chevy.
Third-quarter sales of both GMC and Chevy pickups saw significant increases, but fourth-quarter sales could see numbers below both Ford and Ram for the first time in history given the current strike situation. As it entered the fourth quarter the Chevrolet Silverado was down by over 50,000 units to Ram.
GM Losses Soaring
But beyond the optics, GM profit losses are soaring. It is estimated that through today GM has lost almost $700 million according to Anderson Economic Group in Michigan. If the strike lasts longer than a month, it is estimated that daily losses will increase exponentially to $90 million a day. Current estimates put the daily loss at $10 million.
The Silao, Mexico, assembly plant churns out 1,300 pickups a day. GM also built pickups at assembly plants in Fort Wayne, Indiana, and Flint, Michigan. Both of those plants shut down over three weeks ago once the strike began.
Component plants in the US have been shut down as well which probably caught up with production in Mexico. Both a transmission plant and engine plant here stopped supplying Mexico when the strike began, so it was only a matter of time before the strike caught up with production in Mexico.
Chevy’s Blazer and GMC’s Terrain are built in Ramos Arizpe, Mexico while Chevy’s Equinox and Trax are built in San Luis Potosi, Mexico. Those plants have been closed as well.
So far this year the Chevrolet Silverado had 22.6% of the truck market. The GMC Sierra was up to 9% while Ram increased its share from 21% to over 25%. Ford has maintained its sales lead with the F150 truck at over 36%.
Service Department Parts Are Dwindling Also
Beyond affecting assembly plants outside of the US, parts supplies for dealer service departments have dwindled. So some vehicles in a dealership for service may have to sit until such time as the parts pipeline can be filled.
In the truck segment, brand loyalty is unusually high, so there is a growing concern that with supplies of GM pickups evaporating there could be defections to other brands. Dealers usually order a large supply of trucks because they have so many options. If a specific type of truck is needed for commercial purposes a company might look elsewhere to fulfill their needs.