Worsening chip woes to cost automakers US$210 billion in sales
The cost of the intractable semiconductor shortage has ballooned by more than 90 per cent, pushing the total hit to 2021 revenue for the world's automakers to US$210 billion.
That's the latest dire forecast from Alixpartners, which predicts global automakers will build 7.7 million fewer vehicles due to the chip crisis this year. That's almost double the consultant's previous estimate of 3.9 million. Despite ongoing efforts to shore up the supply chain, semiconductor availability has worsened as automakers exhaust stockpiles and other industries have no more to spare.
“The barrel is empty, there's nothing left to scrape,” Dan Hearsch, managing director of Alixpartners automotive and industrial practice, said in an interview. “Going forward, sales will suffer. Sales hadn't suffered because there was enough inventory to draw from. It's not there anymore.”
Manufacturers have begun warning the problems are metastasizing and could crimp third-quarter earnings, with suppliers Faurecia SE and Hella Gmbh & Co. on Thursday joining Volkswagen AG'S truck unit Traton SE as the latest to sound the alarm. Last week, forecaster IHS Markit made the biggest adjustment yet to its auto-production projections, which have been falling all year due to the global chip shortage.
Key supply centres in Southeast Asia have been hit with factory shutdowns as COVID-19 outbreaks spread. It now takes a record 21 weeks to fill chip orders and auto executives say the shortage could last for years.
“It certainly feels like the most protracted supply shortage the industry has seen because it's not over,” Hearsch said. “It's certainly the most far-reaching. This is every place. This is everybody.”
As inventory on dealers' lots has dwindled, car prices have skyrocketed, reaching a record US$43,355 in the U.S. in August, according to researcher Cox Automotive.