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General Motors Temporarily Suspends Production of Pickup Trucks
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General Motors Temporarily Suspends Production of Pickup Trucks

In an Email statement to CNBC, automaker General Motors (GM) stated that it was temporarily halting the production of its full-size pickup trucks due to the global shortage of semiconductor chips. With this, most of the production of its popular and profitable full-size pickup trucks, Chevrolet Silverado and GMC Sierra, will be suspended in the U.S. and Mexico from next week.

Global semiconductor-reliant industries, especially the auto industry, have been persistently grappling with pandemic-induced chip supply disruptions since early 2020.

So far, General Motors’ efforts have been successful in continuing the production of its large pickup vehicles. To ensure continuous production, the company was making design changes and eliminating parts requiring semiconductors. (See General Motors stock chart on TipRanks)

In the email, the management at General Motors highlighted, “The global semiconductor shortage remains complex and very fluid, but GM’s global purchasing and supply chain, engineering and manufacturing teams continue to find creative solutions and make strides working with the supply base to minimize the impact to our highest-demand and capacity-constrained vehicles, including full-size trucks and SUVs for our customers.”

Last week, Bank of America Securities analyst John Murphy reiterated a Buy rating on the stock and raised the price target to $90 from $80. The price target implies 57.8% upside potential.

Despite a weak outlook for the automotive industry, Murphy expects General Motors to beat earnings estimates for the June quarter. He believes that the current supply crunch in the chip market might be hurting the top line, but a demand surge resulting from this repression will be “more rationally released over a multi-year recovery.”

Consensus among analysts is a Strong Buy based on 14 Buys and 1 Hold. The average General Motors price target of $74.73 implies 31% upside potential.

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