A Side of Chips: Analysts Worsen Outlook for '22, Remain Better Than '21 Levels

It seems this calendar year will improve in terms of supply chain challenges for many auto manufacturers, with a general consensus that new chip sources will alleviate some of last year’s snarls. Still, one forward-looking group of analysts have peered into a crystal ball and determined all hands might not be out of the woods quite yet.

According to eggheads at an outfit called AutoForecast Solutions, roughly 71,000 vehicles have been cut from production at American car factories so far this year. Using calculations and estimates which surely involve some measure of dark magic, the group suggests the country could delete nearly a quarter-million machines from its assembly lines by the time Santa Claus shows up in December.

For perspective, the same analysts reported the American auto industry was off by about 3.4 million cars and trucks in 2021, largely thanks to the global chip shortage. The numbers reported by AFS today are an upward revision compared to estimates made earlier in the year, so please pay no mind to any sensationalist headlines spouting assertations that there will be large increases in production cuts this year. While that statement may be true when comparing these estimates to those of early January, they pale in comparison to what happed in factories across our nation last year.

Production of vehicles in America has hovered around 16 million units since the mid-‘90s according to this chart from Statista, save for a plunge in 2009 when the industry was in dire straits and bankruptcies flew around like rice at a wedding. This same group pegs 2020 production numbers around 13.5 million. Taken with the AFS estimate that the industry bled about 3.4 million units in 2021, that’d put last year’s output just slightly more than the bad-old-days of ’09. Given the dearth of product on some dealer lots, it’s a plausible stat.

Car companies are improving their output compared to 2021 thanks to some creative chip usage (or procurement). Plans are in the works for domestic production of the things, along with new agreements being signed with different chip suppliers. Some companies have taken to deleting certain chip-driven features from their vehicles in order to stretch their existing supply of chips; GM, for example, has binned several items such as parking beepers and active fuel management engine gubbins. Some pickups and SUVs have also lost their temperature setting readouts on dashboard control dials. Other manufacturers are deploying similar tricks.

[Image: General Motors]