Shortage

The global chip shortage is leaving car makers stuck in the slow lane

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This May, car manufacturers produced less than 55,000 vehicles, only half as much as two years ago.


Monty Rakusen / Getty Images

The production of cars in the UK has more than halved compared to the same period before the COVID-19 pandemic, due at least in part to an on-going shortage of chips that are needed to power everything from engine management systems to in-car entertainment. 

According to the Society of Motor Manufacturers and Traders (SMMT), this May car manufacturers produced almost 55,000 vehicles in the UK – a number that, at first glance, seems healthy in comparison to the meagre 5,314 cars that were produced in the same month of the previous year.  

But 2020’s statistics have to be put in context: with the COVID-19 pandemic rapidly gathering pace, factory lines came to a halt as most manufacturers decided to close their facilities altogether, in line with government guidance.

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What automakers and consumers can learn from the chip shortage crunch

When will it be over?

The global chip shortage that has idled automotive plants, delayed shipments of new vehicles and pushed transaction prices to record levels may soon relent as early as this fall. But the dramatic impact of the last 12 months could very well continue into 2022 and beyond.

“Western and U.S. automakers have been hit the hardest. The Japanese have done generally better,” Dan Hearsch, an analyst at AlixPartners, told ABC News. “Automakers are definitely not happy. They’re missing out on sales, on volume. This is not a case where it’s good for any of them.”

Shrinking inventories have led to higher transaction prices for consumers flush with cash and looking to upgrade their rides. Even prices of used cars have skyrocketed nearly 17% in the last 12 months, according to data from iSeeCars.com. Pickup trucks and sports cars are seeing the largest increases.

“More than

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Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Apple Inc. (NASDAQ:AAPL) – Apple Supplier TSMC On How Repeat Of Crippling Chip Shortage Can Be Avoided In Future

Taiwan Semiconductor Manufacturing Co (NYSE: TSM) said the automotive industry needs to modernize its “Just-in-time” supply chain practices to avoid a similar semiconductor shortage as the ongoing one in the future, Reuters reported Friday. 

What Happened: The world’s largest chipmaker has significantly increased 2021 output for a key automotive semiconductor component amid the ongoing global chip shortage, the report said.

TSMC managed to increase output for MCUs (microcontrollers) by 60% over the 2020 level, which when compared with the pre-pandemic level is a 30% increase over 2019, the report said.

In the first quarter, sales for TSMC’s auto chips jumped 31% from the previous quarter, representing only 4% of overall sales.

TSMC is among the growing voices advocating that it is time for the industry to modernize the just-in-time auto supply chain model first adopted by Toyota Motor Corp (NYSE: TM) decades ago which later became an industry

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Chip Shortage Expected to Cost Car Industry $110 Billion in 2021

  • The semiconductor shortage is expected to cost the global automotive industry $110 billion in 2021.
  • Ford and GM have cut their earnings expectations by $2.5 billion and $2 billion, respectively.
  • “This is going to be longer and more difficult than most people think,” one dealer told the WSJ.
  • See more stories on Insider’s business page.

The semiconductor chip shortage is roiling the global supply chain, but no sector is feeling it worse than the auto industry.

A new estimate from the consulting firm AlixPartners puts the global industry cost of the shortage at $110 billion this year, up from an earlier estimate of $60 billion in January.

“The pandemic-induced chip crisis has been exacerbated by events that are normally just bumps in the road for the auto industry, such as a fire in a key chip-making fabrication plant, severe weather in Texas, and a drought in Taiwan,” Mark

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