Chip Shortage Absolutely Tanking New Car Sales

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The automakers are cutting their muscles right now ...
More bad news about the global shortage of semiconductor chips and the auto industry: A new forecast from AlixPartners sees the losses of the automakers far higher than originally expected. The consultancy predicts the bottlenecks will result in 7.7 million fewer cars being built in 2021, causing automakers worldwide to lose $ 210 billion in profits. Previous projections put a deficit of $ 110 billion, which means the consequences of the shortage could be catastrophic.
Learn more about the plan to end the chip shortage here.
As a result, automakers have been forced to cut production on some lines of cash cow models, such as the B. Ford temporarily shutting down its Kansas City assembly plant that makes the F-150 pickup truck. Stellantis was forced to cease production of the Ram 1500 in Michigan while Toyota's Indiana plant was temporarily closed, meaning fewer Sequoias, Highlanders, and Siennas.
Mark Wakefield, global co-head of automotive and industrial practice at AlixPartners, said in a released statement: “Everyone was hoping the chip crisis has now subsided, but unfortunate events like the COVID-19 lockdown in Malaysia and ongoing problems elsewhere made things worse. "
According to Wakefield, many other materials are in short supply in addition to semiconductors, which is having a negative impact on the auto industry. These include steel, resin and human capital as lockdown measures in various countries put pressure on the global economy.
Dan Hearsch, also a managing director in the automotive and industrial practice of AlixPartners, said the "shock absorbers" or additional supplies of various materials often held by automakers and parts makers to help make up for supply bottlenecks are essentially depleted. That means pretty much every shortage anywhere in the world affects automakers and parts makers around the world, resulting in fewer consumer products. This is bad news whether you are buying a new car, used car, or auto parts.
At this point, no automaker will be spared the bottlenecks. Entire factories have been shut down, assembly lines have been scaled back, and the end result is far fewer new cars from dealerships around the world. With this reduced supply, used car prices have skyrocketed, a phenomenon that will not change any time soon.
Around 80 percent of semiconductor chips are currently manufactured in Asia. Intel is building two new foundries in Arizona to bring more of the manufacturing process to North America. On September 23, Commerce Secretary Gina Raimondo and White House Economic Advisor Brian Deese held a semiconductor supply chain meeting in Washington, D.C. to discuss the bottlenecks with members of the industry. Raimondo said low chip production in the United States poses a "national security risk."
Source: Epoch Times
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