Research: automakers globally will produce 7.7M fewer cars this year due to the chip shortage, costing them $210B in sales, as chip lead times slip to 21 weeks
this year alone. Just staggering. @KeithNaughton has the deets: https://www.bloomberg.com/...
Context & Ripple Effects
The chip shortage that began with Volkswagen, Daimler, GM and Renault cutting output in January has compounded all year: lead times have stretched from the fourth straight month of expansion at 17 weeks in April to 21 weeks now, and IHS Markit had already pegged Q1 losses alone at about 1.3M vehicles after the Texas winter storm. Today's research scales the full-year damage — 7.7M unbuilt cars and $210B in lost sales.
What makes this worse than a normal cyclical squeeze is competition for capacity: a boom in car sales collided with surging demand for laptops and 5G chips, which pushed prices up and hit older, cheaper chips hardest — exactly the ones cars use.
First-order effects
- Volkswagen, Daimler, GM and Renault face production cuts far beyond the 100K-vehicle Q1 trim Volkswagen originally guided, as the full-year shortfall lands at 7.7M vehicles across the industry.
- Automakers lose an estimated $210B in sales this year, converting a supply problem directly into a revenue problem on their 2021 results.
Second-order effects
- With chip buyers competing for the same fabs, pricing power shifts toward semiconductor suppliers and away from carmakers, whose long-term contracts assumed stable allocation.
- Dealers and rental fleets facing thin new-car inventory push transaction prices higher, transferring part of the $210B loss from automakers to car buyers.
Third-order effects
- If lead-time slippage keeps outrunning supply responses, carmakers will restructure procurement around direct chip commitments and dual-sourcing rather than tier-one-supplier intermediation — a structural change in how autos buy semiconductors.
- The episode strengthens the case that chip capacity, not assembly lines, is the binding constraint on global vehicle output, raising pressure for dedicated automotive-grade foundry capacity and government-backed fab investment.
The trend: The auto industry is learning that its output is capped by semiconductor capacity lag, pushing carmakers from just-in-time sourcing toward contracted, secured chip supply.