The semiconductor chip shortage was one of the largest challenges automakers faced following the onset of the COVID-19 pandemic in early 2020, and it had long-lasting ripple effects on new vehicle production that still persist today. Though the chip shortage and various other supply chain issues have eased over the past year or so, the impacts of these issues continue, and some expect that to be the case for months and even years to come, according to Automotive News.
The chip shortage has thus far led to millions of units being cut from production schedules, prompting record low inventory levels and record high prices to follow. Regardless, the impact of this phenomenon has eased considerably as the chip supply ramps back up, but it has also changed strategies at companies like Ford, which is prioritizing the production of more profitable models as a result, all while beefing up its own inventory of semiconductor chips and other critical items. “Companies have completely had to rethink their relationship with the supply chain,” said Phil Amsrud, associate director of automotive semiconductor research at S&P Global Mobility.
According to AutoForecast Solutions, the chip shortage resulted in the loss of around 10 million vehicles slated to be built in 2021, along with four million more in 2022 and another two million or so in 2023 – most of which occurred in the first half of last year. Now, even though supply has improved substantially, it seems as if some changes that took place as a result of the chip shortage could linger for years – or even longer, such as automakers prioritizing higher-margin vehicles, stockpiling chips, and sourcing those same parts from domestic companies.
“Perhaps the most significant item that they share with other industries are semiconductors, and they’ve realized that they are not the most important customer when it comes to chips,” said Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions. “Now automakers are realizing that selling $40,000-$60,000 vehicles doesn’t have to be offset by selling $20,000 vehicles as well. Profits are stronger because of it, and assembly lines seem to be humming along fairly well. The only issue is that entry-level customers are relegated to the used-car market.”
We’ll have more on the chip shortage and other supply chain issues soon, so be sure and subscribe to Ford Authority for continuous Ford news coverage.
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