Auto companies are short of chips: largest car factories face production delays

Auto companies are short of chips: largest car factories face production delays

The largest car factories, similar as Volkswagen, Ford and Daimler, continue to face production delays due to lack of chips. According to the management of companies, the crisis will last more than one year.

Lack of chips

Volkswagen CEO Herbert Diess said, that the company is losing market share in China due to a flaw in devices: "In China, we suffered the most. We are losing market share. This is really a harsh difficulty. ".

In Volkswagen appreciated, that the supply situation will get better in the autumn, but it didn't happen. In Malaysia, where are some of the company's sellers posted, there was another epidemic of coronavirus infection, because some of the factories were suspended.

According to Diess, difficulty not only in a severe epidemic: "We're going to face a common shortage of semiconductors.. The web of things is evolving so fast, that there will be restrictions ".

Daimler chapter Ola Kallenius implies, that by the end of the year the situation may improve: "We pin our hopes, that in the fourth quarter we will start to grow again. However, the unknown in production still remains. ".

Porsche car companies, Skoda and Seat also said about the failures in production.

Lack of raw materials

According to the head of the board of directors of Ford Europe Gunnar Herrmann, the lack of semiconductors may persist up to 2024 of the year. And the creation of electric vehicles only worsens the lack. For example, if an ordinary Ford Focus requires about 300 Chips, then for new electric cars ten times more will be needed - up to 3 thousand items.

A week earlier, the head of Tesla Elon Musk called 2021 a year of crazy shortages. The auto company once again postponed the production of new electric cars Cybertruck and Roadster.

According to Herrmann, besides chips, Ford faced a new crisis - a lack of raw materials: "It's not just semiconductors.. Lithium, plastic and steel are also in short supply. You see shortages or limitations everywhere.".

In August, Ford sales in the United States fell by 33% comparing with the previous year. The company later reported, which will reduce the production of the F-150 pickup truck and some other cars.

Supply disruptions slow down auto companies around the world. So, in the UK, car production fell by 38% compared to July last year. This is the worst result since 1956 of the year. And Japan's Toyota reported, which will reduce global production in September by 40%.

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Herrmann notes, that the demand for cars remains high, and their prices will rise along with the cost of raw materials.

Fewer chips, less money

According to the consulting company AlixPartners, semiconductor deficiency in 2021 year will cost the automotive industry 110 billion dollars. “Today, in a typical vehicle, up to 1400 Semiconductors. This number will only grow as you continue to do so., how the industry will continue to move towards electric vehicles. So this is a really critical issue for the industry.", AlixPartners said..

Earlier, Ford and General Motors significantly cut profit plans in 2021 year. Ford - on 2,5 billion dollars, General Motors — by 1.5-2 billion dollars.

Who is in the black

While the production lines of auto companies are idle, used car prices are rising. In the second quarter 2021 year, the average price of a used car increased by 21%, to 25 one thousand dollars.

В Carvana, which sells used cars, the rise in prices is explained precisely by a failure in supplies: “Our volumes correspond to the level 2019 of the year, they haven't changed much. The difference is, that much fewer new cars are produced. This leads to higher prices. ".

In August, Carvana reported its profit for the first time.. In the second quarter 2021 the company sold 107 thousand cars - twice as many, than a year earlier. The company's revenue increased by 198%, to 3,3 billion dollars. Net profit was 45 million dollars.

Carvana shares are up by 82%, and over the past five years - by 2875%. We analyzed the company's business in detail in a separate review.

Auto companies are short of chips: major automakers face production delays

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