Microchip Update

There is no denying it. things are bad. It’s estimated that all automakers have lost almost 6.5 billion vehicles as a result of the chip shortage. Photos of parking lots full of mostly built vehicles are circulating around the internet. They are ready to go, except for the chips.

Let’s take a moment to look at the latest news and see how several automakers have recently been affected by this deficit.

Ford

Ford had to temporarily shut down its beloved Kansas City assembly plant that manufactures F-150s. Being that this is the brand’s best selling vehicle, it’s a good indicator of how rough things are for every player in the industry. 

At the same time as the Kansas City plant, Ford had to close its plant in Germany, which produces the Fiesta model. This particular plant in Germany has had production problems since May, so this is no news to those workers, as they continue to have obstacles in their way. 

General Motors

GM is pushing pause at several of its plants that make sedans and crossovers. Particularly, plants that build their electric models are for the first time being halted. On a positive note, the automaker still plans to release the new electric Hummer this year and the electric Cadillac in 2022. 

Chrysler (Stellantis)

Chrysler’s plant in Windsor Ontario has been shuttered several times this year, contributing to the huge shortage of minivans in the US, which is now the hardest vehicle type to find. The Jeep Gladiator has also been affected as the Toledo, OH plant struggles to stay running amid the shortage. Ram production has been on the rise since June, but Stellantis as a whole reported a cash flow loss of $1.4 billion in the first half.

Toyota

Toyota has cut production at 14 of its assembly plants, which accounts for 40% of what they make. Several models are affected, and Toyota stock has taken a major hit. Despite all of it, Toyota also plans to produce what they originally claimed to and so far, they are still on track with profits for this fiscal year. While that sounds pretty good, the reality is that Toyota can no longer ride the coattails of its preparation efforts, so those numbers will likely change in Q4. 

BMW

Similarly, BMW has made it out pretty well thus far but is now feeling the effects of the chip shortage. The brand is unsure what is to come for them as supplies run out.

Volkswagen

VW is one of the many to cut production shifts left and right, leaving workers with no work and dealers with no inventory.

Luckily, a recent report claims that microchip production should begin to balance out by Q4, but that doesn’t mean that production and auto sales will. The chips will still need shipped, and automakers will still have a backlog to make up for. Hopes are high that the auto industry will see some sort of normalization by Q2 2022, but we will likely see problems ripple through all of next year. 

For a while, it was unknown how long all this would last and the prevail didn’t seem so out of reach. Now it is apparent that automakers are in it for the long haul and can expect long-lasting effects on their production, projections, and profits. Anything that is made from many pieces takes a beating when one of those pieces doesn’t come through. The microchip shortage has trickled down to dealerships, which are having trouble meeting numbers as inventory plummets. Surely this is one for the history books.