Supply Chain Issues Can Hit Auto Firms By $210 Billion In 2021, Says A Forecast

According to Alixpartners, global automakers might lose $210 billion in sales in the current year because of due to supply chain interruptions, which was nearly double compared to an estimate issued by the organization earlier this year.

In a recent projection, Alixpartners stated that a scarcity of semiconductor chips for the global auto industry is only half of the problem. It had noted that there were a number of other problmes which included high commodity prices and scarcity of resources such as steel and plastic resin and these constraints were driving up costs while also forcing auto manufacturers to temporarily cut down on production.

According to the latest projection by the organization, global automakers are on track to lose production of 7.7 million vehicles worldwide in 2021. Alixpartners is a company that provides supply chain and other consulting services to auto makers.

In May, the company estimated that manufacturers would lose $110 billion in sales and produce 3.9 million fewer vehicles than planned for the year.

The gloomy new estimate comes despite concerns from automakers and commercial truck manufacturers that chip shortages and commodity price increases are not abating as 2021 nears its end, as industry officials had hoped. more info Vehicle sales in the United States have begun to decline since stocks on dealer lots are at 20 days’ supply, which is less than half the typical level, according to Dan Hearsch, a managing director in Alixpartners’ auto practise.

“We had originally assumed we would get back to normal and claw back volume” in the fourth quarter, Hearsch told Reuters. “That is not going to happen.”

Instead, he predicts that manufacturers’ inventories would be tight until late 2022 or early 2023.

A COVID spike in Malaysia has hampered production at key suppliers in recent months, putting a damper on semiconductor supplies. more info

Backlogs at key U.S. ports, he claims, are impeding automakers’ efforts to import additional plastic resins and steel.

In response, automakers are committing to lengthier contracts to lock in supply, purchasing up to 40 to 50 weeks in advance, according to Hearsch.

“They are signing up for things they would never have done a year ago,” he said.

(Adapted from DailyAdvent.com)



Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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