By Technology Correspondent Richard Beeby
BBC tech reporter
General Motors has not paid a dividend since 2005 The huge profits of American carmaker General Motors’ have almost evaporated, due to a global chip shortage that has emerged after the earthquake in Japan. GM’s third-quarter profit halved from a year ago to $2.1bn, although its sales climbed by 15%. Profits have been hit hard by a lack of silicon chips used in processing the company’s vehicles. GM has increased the cost of its cars by up to $1,000, but says the price rise will help it cope with the crisis. GM said in a statement that it had curtailed production to save on its inventory of commodities like memory chips and carbon fibre, and had significantly reduced the amount of raw materials it imported. “We continue to have confidence in our plan and believe that our financial condition remains strong,” said chief executive officer Ed Whitacre. “These disruptions are temporary and we have flexible supply chains.” Mr Whitacre also said the company would consider selling a part of its non-core assets to raise funds. Already in the last quarter, the company was forced to drop plans to launch a Cadillac super-car and said that it may no longer build a new small, medium-sized car. Electrical issues Auto manufacturers like GM and German giant BMW are also affected by the problem, because they manufacture a large proportion of their cars in the US and Europe, rather than China.
Engineers rebuild gadget inside C-17 US carmakers have traditionally relied on the Chinese for building their car parts, with Germany, Japan and South Korea being more in demand. General Motors builds 50% of its Chevrolets in the US, and BMW’s BMW brand is just over half of Germany’s car manufacturing. BMW said it has successfully avoided production problems because the shortage of “oughts,” a type of silicon used in electrical components, had not hit its Mercedes V6 hybrid technology. But it is actually General Motors’ Lincoln and Cadillac lines that are bearing the brunt of the supply constraints. Already in the last quarter, the company was forced to drop plans to launch a Cadillac super-car and said that it may no longer build a new small, medium-sized car. British sportscar maker Lotus was also forced to cancel production in July because it needed parts to build its own electric vehicle. In response, the car company launched a restoration programme of the C-7 Series of mid-Range Jaguar’s, which first went on sale in 1961. “This represents a significant economic opportunity for the Company to demonstrate its continuing commitment to the automotive industry,” said Ian Callum, Lotus’s technical director. The company said it expected to start producing its new C-X17 electric car from January next year.
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