Technology

Chip shortages are anticipated to price the auto business $ 210 billion in 2021

chip-shortages-are-anticipated-to-price-the-auto-business-210-billion-in-2021

Ford announced on Jan.

ford

According to the consulting firm AlixPartners, the semiconductor chip shortage is expected to cost the global automotive industry $ 210 billion in sales in 2021 with no end in sight.

The forecast is almost double the previous forecast of $ 110 billion in May. The New York-based company released an initial forecast of $ 60.6 billion in late January when the parts problem began driving automakers to cut production at their plants.

“Of course, everyone was hoping the chip crisis would weaken by now, but unfortunate events like the COVID-19 lockdown in Malaysia and ongoing problems elsewhere have made things worse,” said Mark Wakefield, global co-head of automotive and industrial Practice at AlixPartners, in a statement.

AlixPartners now predicts 7.7 million production units will be lost in 2021, up from 3.9 million in the May forecast.

According to Dan Hearsch, Managing Director in Automotive and Industrial Practice at AlixPartners, the biggest drop in production occurred in the second quarter.

“The second quarter of this year is still the worst ever of chip shortages in terms of lost vehicles,” he said in an email to CNBC. “But what has changed is that the global auto industry just hasn’t been recovering as quickly as we thought when we made our forecast in May, due to unforeseen things like the rise of the Delta variant and the Covid outbreaks in Malaysia and other southeast. ” Asian countries.”

Automakers around the world, including Ford Motor and General Motors, warned of massive profit cuts this year due to the chip shortage. However, some, if not many, of those losses have been offset by robust consumer demand and higher gains from record vehicle prices.

According to Hearsch, AlixPartners expects the parts problem to persist at least into the second quarter of next year. He said it “will likely take a little longer” for vehicle inventories to improve noticeably, citing other supply issues with manpower, transportation and other materials.

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