The problems of the automakers are much worse than we thought
Industry experts say automakers are struggling to obtain all kinds of parts and raw materials for a variety of reasons, including plant closures related to Covid by suppliers, logistics issues involving shortages of ships, containers shipping and truck drivers, and the challenges faced by some suppliers. fill jobs.
Chips “are just one of many extraordinary disruptions the industry faces, from resin and steel shortages to labor shortages,” said Mark Wakefield, Global Practice Co-Head. automotive and industrial at the industrial consultant AlixPartners. “There is no room for error for automakers and suppliers at this time.”
What’s more, lost sales from not building these vehicles will cost automakers around $ 210 billion this year, according to AlixPartner’s latest estimates. That’s nearly double the company’s $ 110 billion estimate in May.
These lost sales will only be partially offset by higher prices, which will generate $ 90 billion in additional revenue on the vehicles sold. But automakers will also have to pay $ 150 billion in increased costs for parts and raw materials, or about $ 2,000 per vehicle.
In total, the industry will take a net hit of $ 270 billion from the various shortages, according to AlixPartners estimates, while car buyers will pay $ 90 billion in higher prices.
Supply chain reaction
Microchip supply was generally expected to hit its lowest level in the second quarter of this year and then start to improve. But an increase in Covid-19 cases has sparked a new round of shortages, as chip factories have been forced to temporarily shut down in some hard-hit countries, such as Malaysia.
Meanwhile, stocks of other key materials have also dried up.
“It’s not just the shortage of chips. Almost every industry (…) faces some sort of supply chain problem,” said Cindy Jaudon, regional president for the Americas at IFS, a company global business software. “Our ports are extremely full. Paint manufacturers are grappling with titanium dioxide. They’re stacked up.”
And there is little relief in sight.
“There really are no more shock absorbers in the industry right now when it comes to producing or procuring material,” said Dan Hearsch, Managing Director of AlixPartners. “Virtually any shortage or disruption in production in any part of the world affects businesses around the world, and the impacts are now magnified because of all other shortages. “