Economy News

Expected loss of $210 billion in the global automotive industry

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According to foreign media reports on the 22nd (local time), consulting firm Alix Partners estimated that global automotive production, which has declined due to a shortage of semiconductors, reached 7.7 million units.

According to the same consulting firm in May, the automotive industry lost about half the units it had anticipated (3.9 million). Total lost were estimated at $110 billion at that time.

automotive industry

Due to the continuing shortage of microchips, which stifles automotive production, a $210 billion revenue shortfall is expected to occur in 2021 as a result of missed sales worldwide. The company doubled its forecast since last May.

The automotive industry is experiencing a shortage of semiconductors due to supply chain disruptions following Covid-19. An order for semiconductor chips currently takes 21 weeks, and a bleak outlook for the industry suggests that this shortage may last for years. According to Alix Partners, 7.7 million cars will not be manufactured this year. The news comes at a time when demand for components is extremely high following the lifting of health restrictions in the spring for electric vehicles.

Alix Partners found that not only semiconductors, but also basic materials like steel and plastic resins are under pressure to reduce automotive production as prices rise and supplies tighten.

According to Marcus Kleinfeld, a consultant at Alix Partners, chip production cuts caused by Covid-19 haven’t abated since the May estimate.

The Japanese automaker Toyota, for example, planned to produce 400,000 fewer vehicles than expected due to a shortage of parts in September and October. At the Munich auto show in September, Daimler’s Ola Källenius predicted the “structural” shortage of production capacity would persist in the industry until 2022.

“As of right now, production has been maintained because of an inventory of semiconductors,” said Dan Hirsch, Managing Director of Alix Partners’ Automotive Division.

The price of cars has also risen. Cox Automotive reports that the average selling price of a car in the U.S. last month reached an all-time high of $43,355.

For MetaNews.

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Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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