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General Motors vehicles sit in a holding lot September 2, 2021 in Lansing, Michigan; Photo: Bill Pugliano/Getty Images

Supply chain issues related to the Delta variant have become the latest round of “whack-a-mole” for the auto industry.

Catch up quick: GM is halting or continuing to halt production at eight of its North American assembly plants because of chip shortages. 

  • The impacted plants in Indiana, Missouri, Michigan, Tennessee, Canada and Mexico are expected to be offline for a few weeks.
  • “During the downtime, we will repair and ship unfinished vehicles from many impacted plants, including Fort Wayne and Silao, to dealers to help meet the strong customer demand for our products,” a GM spokesperson tells Axios.

Why it matters: The rise of the Delta variant in Southeast Asia, where many chip plants are located, could take months to resolve — impacting already-dwindling vehicle inventories, driving up consumer costs and limiting car manufacturers’ future earnings through 2023.

By the numbers: U.S. light vehicle inventory is down 70% compared to two years ago, as of the end of August, Dave Whiston, U.S. autos equity analyst at Morningstar, tells Axios. 

  • In GM’s case, inventory was down 86% in August this year over August 2019.
  • The average transaction price for a new car reached a new record of $42,736 in July, according to Kelley Blue Book, up 8.2% from July 2020. Among makes, Cadillac prices grew the most — by 32.8%.
  • Minivan (16.7%), mid-size (12.6%), and luxury full-size SUV/Crossover (12.6%) vehicle prices rose the most.

What they’re saying: “GM’s been doing what everyone else has — taking what chip inventory they can get and putting them toward more profitable cars like pickup trucks,” says Whiston.

  • One plant where GM hasn’t lost production is Arlington, Texas, which produces the GMC Yukon and Cadillac Escalade, he adds. "It’s not a coincidence that it’s spared."

The big picture: Nearly every automaker has paused production at some point during the pandemic. 

Yes, but: Even if the health crisis was resolved immediately, it would still take about six months for chips to reach automakers, says Whiston.

  • “The chip shortage is not going to be abruptly over. It could go well into 2022 and 2023,” he said. 

What to watch: Other variables, like skyrocketing steel prices, aren’t helping with production problems. 

A GM spokesperson says that “although the situation remains complex and very fluid, we remain confident in our team’s ability to continue finding creative solutions to minimize the impact on our highest-demand and capacity-constrained vehicles.”

The bottom line: It’s been like a game of whack-a-mole, according to Whiston. “One problem gets fixed [and then] another comes up.”

Go deeper

Sep 16, 2021 - Economy & Business

Ford adds jobs to meet soaring demand for electric F-150 Lightning

Ford's first F-150 Lightning pickup truck prototypes are rolling out of the factory in Dearborn, Mich., for real-world testing. Photo: Ford Motor

The electric Ford F-150 Lightning pickup hasn't even gone on sale yet, but demand is so hot that the company is already expanding production.

Driving the news: The first Lightning prototypes are leaving Ford's Dearborn, Mich., factory for real-world testing, with the truck available to customers next spring.

10 hours ago - Health

FDA advisory panel recommends Pfizer boosters for those 65 and older

A healthcare worker prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at the Key Biscayne Community Center on Aug. 24, 2021. Photo: Eva Marie Uzcategui/Bloomberg via Getty Images

A key Food and Drug Administration advisory panel on Friday overwhelmingly voted against recommending Pfizer vaccine booster shots for younger Americans, but unanimously recommended approving the third shots for individuals 65 and older, as well as those at high-risk of severe COVID-19.

Why it matters: While the votes are non-binding, and the FDA must still make a final decision, Friday's move pours cold water on the Biden administration's plan to begin administering boosters to most individuals who received the Pfizer vaccine later this month.

11 hours ago - World

France recalls ambassadors from U.S. and Australia over submarine deal

Secretary of State Antony Blinken (L), French Foreign Minister Jean-Yves Le Drian (C), and French ambassador to the U.S. Philippe Etienne. Photo: Nicholas Kamm/AFP via Getty Images

France has taken the extraordinary step of recalling its ambassadors to the U.S. and Australia after both countries blindsided their French allies with a new military pact and submarine contract, the French Foreign Ministry announced on Friday.

The backstory: While sealing an agreement with the U.S. and U.K. to acquire nuclear submarines, Australia ripped up an existing $90 billion submarine deal with France. That led senior French officials to accuse the U.S. of a "stab in the back."