28 Mar 2023 -

US car production cuts increase as chip shortage and supply chain issues persist

Automotive suppliers face down another difficult year as industry macro conditions remain volatile and growing electric vehicle (EV) volumes add significant operational complexity, reports consultants Alvarez & Marsal (A&M)

“North American automakers eliminated approximately 344,000 vehicles from their 2023 worldwide production plans in March because of further escalation in the ongoing global microchip shortage, according to AutoForecast Solutions (AFS),” writes A&M.

“The updated estimate more than triples the previous year-to-date total losses to approximately 478,000 vehicles for the region, causing manufacturers to frontload production cuts for the year. AFS still expects approximately 2.8 million vehicles will be cut from production plans for lack of chips in 2023, down from 4.38 million in 2022 and 10.56 million in 2021.

“Automotive suppliers largely underperformed consensus profitability targets in Q4 and FY 2022 after a difficult operating year, marred by supply volatility and record low inventory levels for automakers. Outperformers, such as Michigan-based BorgWarner, have focused primarily on efficiency and growth in the electrification of their business and cite 2023 as an inflection point for the automotive supply industry.”

The 2023 outlook is mixed

The effects of the automotive chip shortage do not appear to have been evenly distributed between manufacturers. Some companies, such as BMW, Mercedes, and Volvo, reported no significant chip supply issues early in the second half of 2022. Others like Nissan, Hyundai, and Volkswagen said that semiconductor issues were improving at that time.

But many of the world’s largest manufacturers are still facing significant difficulties related to the microprocessor shortage heading into 2023. Honda, General Motors, Ford, and Toyota all reported significant chip supply issues in the second half of 2022. General Motors suggested that those issues would continue into this year.

The auto chip shortage remains, but it may be improving

Automotive manufacturers are still dealing with the effects of the microchip shortage that began in 2020. Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, told reporters that he believes the industry will see 2-3 million units cut from production in 2023.

This figure highlights the continued production difficulties that manufacturers face. However, if Fiorani’s estimate holds true, it would mark a significant improvement for the industry.

More than 10.5 million vehicles were cut from production in 2021, according to Auto News. In 2022, automakers around the world cut an estimated 4.3 million cars from their production schedules. Losing 2-3 million units would still be a hardship for manufacturers, but it would indicate that supply chain issues are beginning to ease.

To avoid electronics supply-chain disruptions, you may also wish to consult an expert in electronics component supply. With more than three decades of supply-chain expertise, Astute Electronics is ideally placed to work with you on your daily component requirements.

For more help with looking at supply chain options, contact Astute Electronics

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