The global chips shortage is wreaking US$110 billion of havoc on carmakers from Ford to General Motors
- The estimated cost from the worldwide shortage of automotive chips has just increased by 80 per cent to US$110 billion, according to an analysis
- Global carmakers will lose 3.9 million vehicles in production this year
As the semiconductor shortage hobbling the global automotive industry has worsened, its cost as a hit to sales has almost doubled to US$110 billion, up from an earlier estimate of US$61 billion.
That’s the latest assessment of AlixPartners, a global consulting firm closely monitoring the widening crisis. It also now says the world’s carmakers will lose 3.9 million vehicles of production to the chip shortage this year, more than its prediction four months ago of 2.2 million. That’s about 4.6 per cent of the 84.6 million vehicles that AlixPartners had projected in total production for 2021.
Carmakers issued warnings in earnings reports in recent weeks that the chip shortage would get worse before it gets better. Ford Motor and General Motors each predicted the second quarter would be the worst of the calamity, as they are forced to idle factories for lack of the essential components. But the industry isn’t likely to see signs of recovery until the end of the year, according to the AlixPartners assessment.
“It’s still deeply impacting the third quarter,” Mark Wakefield, head of the firm’s global automotive practice, said in an interview. “We don’t really have it getting into a recovery mode at all until the fourth quarter.”
SCMP Infographics: Global carmakers and their venture partners in China
The timing takes on added importance because the chip-related production cuts are driving up prices of new and used vehicles, contributing to higher inflation in the US.
Another researcher, LMC Automotive, predicts global production will be cut by almost 3 million vehicles in the year’s first half alone.