Alarming new figures at cost of chip shortage for auto industry

The semiconductor chip shortage is affected by COVID-19 lockdowns in factories producing them.

US consulting firm AlixPartners has announced a bleak outlook for the global motoring industry’s ongoing semiconductor chip shortage, stating a revenue loss of US$210 billion this year.

In a press release, AlixPartners said the loss was greater than its previous estimate in May of $110b (NZ$115b).

In terms of vehicles, AlixPartners is now forecasting that production of 7.7 million units will be lost in 2021, up from 3.9 million in its May forecast.

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of automotive and industry practice for AlixPartners.

“Also, chips are just one of a multitude of extraordinary disruptions the industry is facing—including everything from resin and steel shortages to labor shortages. There’s no room for error for automakers and suppliers right now; they need to calculate every alternative and make sure they’re undertaking only the best options.”

Dan Hearsch, a managing director in AlixPartners’ automotive and industrial practice, added, “There really are no ‘shock absorbers’ left in the industry right now when it comes to production or obtaining material”. 

“Virtually any shortage or production interruption in any part of the world affects companies around the globe, and the impacts are now amplified due to all the other shortages. That’s why it’s critical that companies be armed with good information and analysis to begin with, and that they follow through with flawless, determined execution.”

For New Zealand new car buyers, it means longer delays in vehicles getting here or having cars arriving here without such standard features as electric seats.