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Auto industry turns on hazard lights amid chip shortage

Updated on Friday, July 30, 2021 – 16:47

The ‘loss’ of 52 million cars produced in 2021 increased wait times to buy and drive up vehicle prices.

The auto industry continues to suffer from a shortage of electronic chips, with production slowing down and factories shut down, but is confident that the horizon will begin to clear by the end of 2021.

Both manufacturers and suppliers of equipment in the sector have so far presented better-than-expected semi-annual results, but still held back by the shortage of these semiconductors.

These parts, essential for assembling increasingly computerized vehicles, have been difficult to find since the end of 2020.

Although customers are gradually returning to dealerships, Mercedes or BMW had to temporarily suspend activity at various factories.

Jaguar-Land Rover warned that this shortage could cut its sales in half in the third quarter.

And on Thursday, the giant Volkswagen pointed out that the risk of blockage and disruption in the supply of semiconductors “intensified in the sector” and consequently lowered its sales forecast.

“We have managed to limit the consequences of these obstacles so far,” said the CFO of the German group, Arno Antlitz. “But we anticipate more pronounced effects in the third quarter.”, he warned.

At the peak of the crisis

Ford also temporarily closed some factories, although they benefited from strong demand for their cars, vans and trucks for “optimize revenue and profits“, offering fewer promotions and focusing on the most profitable models. Thus, the Average price in North America increased 14% year-on-year.

Chip shortages forced Nissan to delay the departure of your new 100% electric crossover Ariya, although the Japanese brand has not changed its annual sales target.

And Tesla, who has been seen held back by a shortage of airbags and belts, devised programs to use new compounds, noted Monday its leader Elon musk.

This crisis “has reached its peak”, says the director of the Automobile Research Center, Ferdinand Dudenhffer. “The situation is going to improve as new production capabilities become available, but the problem will not be solved by the end of 2021 and could last until 2023. There will continue to be a risk in the supply chain, “he warned.

The expert foresees a total of 5.2 million vehicles “lost” in 2021 and a sharp decline in enrollment in the second semester, with longer waiting times and higher prices for customers.

Until 2022 or 2023

The shortage also has consequences on the second-hand vehicle market, which is also becoming more expensive due to increased demand.

The equipment supplier Valeo, which uses 50 billion electronic compounds a year For its driver assistance and lighting systems, among others, it managed not to interrupt its production, transferring compounds from its best equipped factories.

“Whenever electronic compounds were presented, we decided to buy and store them”said the company’s chief financial officer, Robert Charvier, to journalists. Valeo prev May the crisis end, but continue in 2022.

Supply chain

In an industry where logistics is calculated almost to the minute, “equipment suppliers and builders are re-evaluating their supply chain to better control it, diversifying your sources if possible “, analyze Nils poel, of the European Union of Equipment Suppliers. “Some builders coordinate better with their suppliers. Others put pressure on them,” he says.

To the economics professor at EM Normandie business school, Mathilde Aubry, the automobile sector could “fare better” than others and “not be the one that suffers the longest”.

The US government plans to invest $ 52 billion to depend less on Asia. Europe tries to repatriate the production of miniaturized chips, essential in “ultra-strategic sectors linked to health and safety”says Aubry.

The automotive sector must monitor another eventual shortage, prevents Dudenhffer. The unforeseen explosion of electric vehicle sales since 2020 may cause battery cells to become scarce from 2023.

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