AlixPartners, the consultancy, warned that chip shortages could cost the global car industry $110 billion, up 81.5 per cent from its forecast of $61 billion in January.
AlixPartners also forecasts that global car production will fall by 3.9 million this year due to chip shortages, up 77 per cent from its January forecast of 2.2 million. In terms of industry recovery time, the company does not expect the industry-wide chip shortage to improve until the fourth quarter of this year.
AlixPartners said the chip shortage this year was caused by unexpected factors such as a long chip production cycle, a fire at a chip factory in Renesas, Japan, and a winter snowstorm in Texas, the United States. Affected by the shortage of chips, including Ford, GM, Stellantis and other automakers have been forced to stop production for days or even weeks.
Dan Hearsch, managing director of AlixPartners Automotive, saidAt present, there are as many as 1400 chips in an ordinary car.This figure will only increase in the future. Carmakers' top priority now is to do their best to mitigate the short-term impact of the chaos, which could range from renegotiating contracts to managing investors' expectations.
Global automakers have also warned of chip shortages in recent results, saying they are expected to worsen in the future.
Ford CEOJim Farley said in a quarterly call that Ford's planned production in the second quarter would be forced to fall by 50 per cent, much higher than the 17 per cent drop in the first quarter, as the chip shortage could worsen. The company is redesigning cars to use the most common and available chips.
But the decline in car supply has also increased profits per car.Farley said Ford would keep its car inventory low to boost its profits per vehicle under the influence of COVID-19 's epidemic and chip shortages. In the first quarter, Ford recorded a net profit of $3.3 billion, or 81 cents a share, well ahead of market expectations (21 cents) and a record since 2011.
