Chip Shortage Forces Ford Into Inventory Shortage

Tim Healey
by Tim Healey
chip shortage forces ford into inventory shortage

If you want to buy a Ford, you might have to hurry.

The microchip shortage could leave at least some Ford dealers short on inventory until perhaps August, according to Automotive News.

One dealership in Michigan even created an emergency fund that its salespeople can draw from.

“We know for sure there’s going to be three months of heartache and hand-wringing,” Mark O’Brien, chairman of Roy O’Brien Ford, told AN. “We don’t want our people having concerns about where the next meal’s coming from.”

The chip shortage could cut Ford’s production output by half this quarter. While there’s never a good time to have production slashed by a component shortage, it’s particularly a bad time as consumer demand for new cars surges as America slowly digs itself out of the coronavirus pandemic.

Not to mention that Ford in the midst of the product cadence of launching a slew of new or redesigned models, including the redesigned F-150, the Bronco and Bronco Sport, and the Mustang Mach-E.

Oh, and did we mention that Ford has also spent several years restructuring in order to impress investors?

Initial predictions suggested the chip shortage would only hurt production at a small level — perhaps a few hundred thousand units. Now, Ford will lose production of 1.1 million vehicles and incur a financial hit of $2.5 billion. Indeed, the company expects to make less money in the final nine months of 2021 than it did in the first quarter of the year.

Ford’s first-quarter net profit was $3.3 billion if you’re wondering. Predictably, its stock dropped 10 percent after this news.

Obviously, Ford isn’t alone when it comes to production shutdowns caused by chip shortages. Volkswagen, Honda, Nissan, and BMW all had halts to production last week.

But Ford does face a challenge that others don’t — nine of Ford’s Tier 1 suppliers use chips from Japanese company Renesas. Renesas suffered a fire in March and isn’t expected to be back to full capacity until July.

Ford said it has a 33-day supply of vehicles right now, and it expects that number to tighten. About 22,000 vehicles, including F-150s, are in a partial state of assembly, waiting for chips.

It’s safe to say things are getting a bit … chippy. Thanks, folks, I’ll be here all week.

[Image © 2020/2021 Chris Tonn for TTAC]

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  • EBFlex EBFlex on May 04, 2021

    The biggest losers in Fords shortage are the tow truck drivers and service centers. They are going to feel this for a while. No Fords on the road, many fewer vehicles to tow and fix.

  • SPPPP SPPPP on May 04, 2021

    When supply chains go bad! The moment when "JIT" becomes "Oh $#!&!".

  • Dusterdude @El scotto , I'm aware of the history, I have been in the "working world" for close to 40 years with many of them being in automotive. We have to look at situation in the "big picture". Did UAW make concessions in past ? - yes. Do they deserve an increase now ? -yes . Is their pay increase reasonable given their current compensation package ? Not at all ! By the way - are the automotive CEO's overpaid - definitely! (That is the case in many industries, and a separate topic). As the auto industry slowly but surely moves to EV's , the "big 3" will need to be producing top quality competitive vehicles or they will not survive.
  • Art_Vandelay “We skipped it because we didn’t think anyone would want to steal these things”-Hyundai
  • El scotto Huge lumbering SUV? Check. Unknown name soon to be made popular by Tiktok ilk? Check. Scads of these showing up in school drop-off lines? Check. The only real over/under is if these will have as much cachet as Land Rovers themselves? A bespoken item had to be new at one time. Bonus "accepted by the right kind of people" points if EBFlex or Tassos disapproves.
  • El scotto No, "brothers and sisters" are the core strength of the union. So you'll take less money and less benefits because "my company really needs helped out"? The UAW already did that with two-tier employees and concessions on their last contract.The Big 3 have never, ever locked out the UAW. The Big 3 have agreed to every collective bargaining agreement since WWII. Neither side will change.
  • El scotto Never mind that that F-1 is a bigger circus than EBFlex and Tassos shopping together for their new BDSM outfits and personal lubricants. Also, the F1 rumor mill churns more than EBFlex's mind choosing a new Sharpie to make his next "Free Candy" sign for his white Ram work van. GM will spend a year or two learning how things work in F1. By the third or fourth year GM will have a competitive "F-1 LS" engine. After they win a race or two Ferrari will protest to highest F-1 authorities. Something not mentioned: Will GM get tens of millions of dollars from F-1? Ferrari gets 30 million a year as a participation trophy.