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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