How Many Vehicles Will the Chip Shortage Really Cost Us?
While the global semiconductor shortage is often reported as this out-of-nowhere surprise that has totally rattled smartphone and automotive manufacturers, 2020 was rich with signals that trouble was afoot. Global lockdowns forced factories to shut down, creating a lapse in demand in damn-near everything. By the time lines started firing back up, supply chains had become a disorganized mess. Nobody knew quite where to focus their efforts. But it was clear that everyone was going to be spending a lot more time indoors, resulting in an elevated need for the sort of components that go into mobile devices, television sets, personal computers, and other electronic gizmos.
Automobiles saw demand suppressed by around 15 percent (year-over-year) in 2020. However, the year ended with increased demand the industry figured would carry over into 2021. That, in conjunction with vehicles needing more semiconductor chips than ever to make sure they’re equipped with the latest features and perpetually connected to the internet, has automakers sweating. Practically every name in the industry has announced production shortfalls. But just exactly how many vehicles are we expected to lose from this?
Half a dozen factories in North America have already announced extended closures until the chip supply normalizes, leaving the region with automakers claiming a 239,000 vehicle deficit that AutoForecast thinks could end up as high as 402,000. European shortfalls are nearly as bad, with estimated losses eclipsing North America at 520,000 units.
As the global hub of semiconductor suppliers, Asia is assumed to see fewer problems. Chinese facilities are expecting to build 128,000 fewer vehicles than anticipated with the rest of the continent performing slightly better. Still, AutoForecast thinks the region could lose as many as 439,000 planned units.
Sadly, we don’t see this issue being totally resolved as supply chains improve. Chip demand is unlikely to go back down unless automakers become suddenly disinterested in having their products digitized (fat chance) and national security issues are starting to become a problem. China has been hungrily eyeing Taiwan forever and is starting to signal that it might make a move. While the big issue is the political fallout and probable war, Taiwan is one of the largest chip suppliers for our market. But even if things fail to reach that point, most are under the assumption that chip shortages will persist until local markets fulfill their own needs and are anticipating higher prices regardless.
[Image: General Motors]
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It is time for Uncle J to send air carriers to South Chia sea.
Used vehicle prices will go up with less new vehicles available, less vehicles traded in because of lower miles driven during the pandemic, and more people buying vehicles instead of riding mass transit. As for more wires on today's vehicles versus 40 or 50 years that is true but even if the manufacturers eliminated many of the wires they would be replaced with wireless technology which requires more chips and thus a larger shortage in chips.