Chip Shortage Bites Bottom Line
A new study by AlixPartners, a global consultancy firm, indicates the semiconductor shortage will cost the global auto industry $110 billion (USD), nearly twice as much as the firm forecast in January of this year. The shortage, which is expected to trim nearly 4 million vehicles off industry production plans for 2021, has left consumers scrambling for product and paying considerably more for vehicles when they can get them.
The issue is expected to play havoc with 2022 model year roll outs said Dan Hearsch, a managing director with AlixPartners. “There are simply going to be instances where they won’t be able to get all the parts”
The shortage has dramatically reduced dealer inventories, usually kept at an average of 60 to 70 days supply of vehicles, now at a 30 day average.
According to AlixPartners, things could get worse as typical new vehicles use about 1,400 chips and the number can grow for high line luxury models. In response OEMS have resorted to what’s called “build-shy” where products get modified, even leaving out features that might otherwise delay production, for example one OEM has stopped equipping its pickups with camera based rearview mirrors. Hearsch cautions the issue could extend into next year and that’s if nothing else goes wrong.
For more: https://www.thedetroitbureau.com/2021/05/chip-shortage-impact-surges-to-110-billion-study-reveals/