AUTO INDUSTRY CHIP SHORTAGE FALLOUT

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Geely Auto, a Chinese maker of all-electric cars (EVs), has warned of possible production cuts because it remains unable to source enough computer chips.

The shortage contributed to the company’s first-half sales falling about 10 percent below forecasts made by economists Bloomberg had surveyed, and missing the analysts’ profit target by a third.

“Short supply of chips is still a big uncertainty,” Geely CEO Gan Jiayue said in comments quoted by the Financial Times.

“I can’t tell you when” the shortage will end, he added, but said Geely will fare better than many competitors because it has been hoarding chips since September.

The chip scarcity is a major factor in China’s auto industry’s June sales slipping 12.4 percent below those a year earlier, the FT reported.

Chinese vehicle makers sold 12.8 million units during the first half of this year, 25.6 percent better than in 2020 but still below 2019’s volume.

Already, Japan’s Toyota Motor Corp. has announced that it will produce 140,000 fewer cars and trucks next month, a 40-percent production cut due to a lack of chips. 

North American production cuts in September will mean a reduction of at least 60,000 and possibly as many as 90,000 fewer vehicles, the company said, although it does not intend to lay off workers, it added.

The cuts also will affect 14 plants in Japan and factories in Europe, China, and elsewhere.

“While the situation remains fluid and complex, our manufacturing and supply chain teams have worked diligently to develop countermeasures to minimize the impact on production” of the chip shortage, the company said in a statement announcing the slowdown.

This week, Ford will shut down a plant near Kansas City that makes its iconic F-150 pickup truck, due to a shortage of various components; a Dearborn, Mich. Plant will continue to turn out the trucks.

General Motors paused most North American truck production for short periods this month at various U.S. plants and will shut down a Lansing, Mich., factory for two weeks, the company has announced.

A GM plant in Spring Hill, Tenn., closed this week and will remain so until at least 6 September, the automaker said.

The company is closing a plant in Mexico and another in Canada for two weeks and has halted production of all Chevrolet Bolt electric vehicles, the New York Times reported.

TREND FORECAST: With long term economic decline on the horizon, more people will be less able to afford an automobile. Thus, we forecast an OnTrendpreneur® opportunity to manufacture less high-tech, chip dependent trucks/autos that will cost less to buy, and much less to repair. 

TRENDPOST: As we have noted previously (“More Chip Shortages, Higher Inflation,”  Trends Journal, 27 April 2021), the chip shortage will take a long time to correct. The lack of chips not only will reduce the auto industry’s output but also that of a range of consumer items, fueling inflation as demand for electronics continues to exceed supply during the world’s struggle back toward economic normalcy.

6 Comments
  1. David Goldman 12 months ago

    The fun has just started pray the is a soft come Dow but I doubt it with our incompetence so called politicians there moto be corrupt only me not u

  2. Neil Mrowca 12 months ago

    Have you seen the 2022 models, so much high tech. So much computerized required safety equipment . A car is now a gasoline computer with wheels. Car Dealerships pricing like an OPEC cartel. Manufacturers my discover they can be more profitable making less and raising prices. Might force everyone back on the bus and back to city living.

  3. Craig Bradley 12 months ago

    Yes, in-fact Ford intends to cut back on new vehicles on the dealer lots. Customers can place an order and then wait for 8 weeks to get their new car. Will customers still want to buy under these new sales techniques? Perhaps Ford just does not want to get stuck with a lot of surplus inventory the next time the economy tanks.

  4. Matthew Vaquerano 11 months ago

    So from my understanding this will push up the prices in the used car market again ?
    they have already reached 20-30% higher prices.

  5. […] broadly, as we wrote in “Auto Industry Chip Shortage Fallout” (24 Aug 2021), the economic turmoil following the global shutdown will leave fewer people able to […]

  6. […] as the company made fewer cars due to the lack of chips, an industry-wide crisis we reported in “Auto Industry Chip Shortage Fallout” (24 Aug 2021) and other […]

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