Microchip Shortage Continues to Impact the Auto Industry
The latest numbers released by Automotive News a few days ago are bleak. Beginning in the summer of 2020, the microchip shortage has recently intensified. Overseas manufacturers had just begun to recover from COVID-19 manufacturing shut-downs when demand notably spiked. An increase in laptop and smartphone sales, both of which use microchips, has created a supply chain shortage for vehicle manufacturers that is impossible to ignore. Additional supply delays caused by the grounded container barge blocking the Suez Canal for more than a week certainly didn’t help matters.
How Has the Auto Industry Been Impacted?
In recent weeks, the shortage has been taking its toll on the auto industry resulting in factory shut-downs. There simply aren’t enough microchips to complete the production of vehicles sitting on the line. The financial impact is significant, with some models estimating that the auto industry stands to lose $60 billion in sales during the first half of 2021. To date, Ford, General Motors, Fiat Chrysler, Volkswagen, and Honda seem to have been hit the hardest by the shortage. Automotive News reported that 121,000 units have been removed from the North American production schedule to date. General Motors announced the closure of their CAMI plant until at least the end of June while they navigate the chip shortage and scramble to find other suppliers. The Fairfax Assembly plant will remain closed until some time in July.
It does not appear that relief is in sight. The CEO of Intel, the top microchip producer in the US, reports that the shortage will take at least a couple of years to fully resolve and get back on track.
Additional Shortages Impacting the Auto Industry
Microchips aren’t the only shortage that is negatively impacting the automotive industry. Supply chain disruptions relating to plastics and steel are also causing problems. Auto dealerships and service centers across North America are experiencing shortages in brake fluid, fuel items, and coolant products due to plastic packaging challenges.
Related Article: What Does the Plastic and Can Shortage Mean for the Auto Industry?
The impact of the shortage will be felt by the variable side of the auto industry. Contact your local MOC Representative to learn some ways to offset those losses by increasing Fixed Operations sales through these challenging times.
