Chip Shortage Forces Ford Into Inventory Shortage

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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3 of 28 comments
  • 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 $#!&!".

  • FreedMike It is kind of refreshing to see an off-roader that is focused on the basics of off-roading, versus convincing its’ owner that he’s the real-life incarnation of the Punisher, and the owner of the largest penis in human history.
  • FreedMike I’m for pretty much anything that goes fast. The more, the merrier.
  • ToolGuy 16.9 gallon fuel tank (~15 usable in the real world) combined with abysmal fuel economy means the range of your girlfriend's EV will look pretty good by comparison. 😉
  • ToolGuy Cadillac should make a list of everyone who gets excited by this announcement, and never listen to those people again.
  • Jkross22 My use case is perfect for an EV. I drive about 10 miles/day tops, have a home so I can recharge at night, love how much more efficient an EV is over its ICE counterpart and love the instant torque, quietness, lack of moving parts/reliability/cost of maintenance. I'm the poster child for EV ownership.But I don't have one and don't see buying one anytime soon. As intriguing as they are, there is no way in Haiti I'm dropping 50 large minimum to buy one. Not gonna happen. The Bolt looks like a toe, I really don't like Tesla interiors, I love the Lucid and Polestar 2, the H/K electrics are interesting but look at the price of all of these.