In early July, GM revealed that it was sitting on roughly 95,000 incomplete vehicles as a result of its ‘build shy’ strategy, which has carried the automaker through the global microchip shortage. The automaker has been working hard to clear out these unfinished vehicles, which took a large bite out of its Q2 profits as they languished on vacant lots, with the automaker dwindling the backlog down to roughly 75,000 units.
Speaking to The Detroit Free Press, GM Chief Financial Officer Paul Jacobson said the automaker was caught slightly off guard as it was faced with a shortage of microchips toward the end of the second fiscal quarter, forcing it to partially complete 95,000 vehicles without certain electronic components and store them. The automaker said in its Q2 2022 earnings report that it would recognize revenue on these vehicles throughout Q3 as it brought them back into the plant for completion. It has so far cleared 20,000 of these stored vehicles, with Jacobson describing this result as “tremendous progress” in only one month.
“We’re leaning in very, very aggressively to get those vehicles to market because the demand is there,” Jacobson said of the remaining 75,000 unfinished vehicles it has in its inventory.
Jacobson also said GM has planned for future chip shortages by reducing the variety of chips that it uses in its various model lines, as well as reducing the number of chips it uses in them overall. He said that by the end of the decade, GM vehicles will use only three separate chip families, which will likely make its chip supply chain less fragile.
While chips are a contributing factor to low inventory levels at GM dealers, they aren’t the only reason why it’s difficult to find the right vehicle. Automakers have also dealt with shortages of other components, including plastics and seat foam made from petroleum products, while shipping delays have also caused backlogs at plants. Jacobson told the Free Press that GM has been spending “a lot of money” on priority freight to ensure it can get vehicles to dealers, but expects shipping wait times to normalize throughout 2023 and 2024.