May 17, 2022

condoritolapelicula

Half the Automotive

Almost 10m less cars built in 2021 as supply chain issues hit production

Nearly 10m fewer cars were built this year due to supply chain issues and a semiconductor shortage, analysts say.

Research by market intelligence group LMC Automotive estimated a 9.6m global shortfall in the number of light vehicles produced through 2021. European carmakers are expected to have suffered the biggest hit, producing 3m fewer vehicles as they struggled to get hold of supplies.

Semiconductors have been one of the biggest pain points in global supply chains, with delays, production disruption and hoarding spurred by the Covid-19 pandemic leading to a severe shortage.

The crisis is still running, LMC said, with the situation for car makers unlikely to substantially improve until the second half of 2022, and the gulf between chip demand and supply taking until 2023 to close.

Justin Cox, the group’s head of global production, said the outlook had improved slightly in recent weeks as emergency measures boosted production.

“I think the auto industry itself is beginning to mitigate some of the problems within the supply chain a bit better,” he said. “Some of the things that they put in place early on in the crisis are starting to seep through.”

Steps taken to mitigate the shortage of chips, added Mr Cox, included reducing the number of devices per vehicle. Modern vehicles use hundreds, and sometimes thousands, of semiconductors.

Many have also modernised their inventory management systems to build resilience against future disruptions.

“[Manufacturers] do not want to get caught out like this again,” said Mr Cox.

Overall, light vehicles production is expected to reach 84.9m units this year, a 12pc increase compared with 2020 – when widespread lockdowns shut down production and sales around the world.

Kiki Sondh from consultancy Oxford Economics said the spread of the omicron variant threatened to delay the recovery of global supply chains, particularly if new restrictions push consumers away from buying services and back to goods.

“The worst of the supply chain disruptions have likely peaked, but it will take time for the pressures to unwind,” she said.

Supply chains will “come back stronger” because of pandemic-driven advances and productivity improvements, she added.