GM, Ford Idling Their Michigan Plants over Parts Shortage

General Motors (GM) and Ford Motor (F) have temporarily closed their assembly plants in Michigan over shortage of parts. GM stock and Ford shares fell 3.3% and 2.1% on March 31, respectively.

Next week, GM plans to halt production at its Lansing Grand River factory in Michigan due to a shortage of parts, according to a Reuters report. The company has clarified that parts in short supply are not related to chips. The Lansing Grand River plant produces Chevrolet Camaro, Cadillac CT4, and Cadillac CT5.

The automaker also plans to halt production next week at its Fort Wayne assembly plant in Indiana, due to chip shortages. The Fort Wayne factory builds GMC Sierra 1500 and Chevrolet Silverado 1500 pickup trucks.

On its part, Ford plans to close its Flat Rock Assembly Plant that produces the Mustang next week due to chip shortages. In March, chip shortages forced Ford to suspend production at the F-150 pickup assembly plant in Kansas City for a week.

What is wrong?

The global chip shortage that has affected industries across the board has particularly had a big impact on automakers. Automakers have had to shut production plants, resulting in a decline in vehicles entering the market.

The chip shortage is mostly attributed to issues caused by the COVID-19 pandemic as well as the increasing demand for the components. For automakers, rising car prices have mostly helped mitigate the financial impact of limited chip supply, for now.

Wall Street’s Take

Consensus among analysts is a Strong Buy based on 12 Buys and four Holds. The average General Motors price target stands at $73.13 and implies upside potential of 67% to current levels. Shares have declined 28% year-to-date.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on General Motors, with 2.9% of portfolios tracked by TipRanks increasing their exposure to GM stock over the past 30 days.

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