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Home›US Steel Prices›Supply Chain Grunts Could Cost Automakers $ 210 Billion This Year, Predicts Invest News

Supply Chain Grunts Could Cost Automakers $ 210 Billion This Year, Predicts Invest News

By Brian D. Smith
September 23, 2021
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DETROIT (Reuters) – Global automakers could lose $ 210 billion in revenue this year due to supply chain disruptions, nearly double the forecast earlier this year, consulting firm Alixpartners said Thursday.

A semiconductor shortage is only part of the problem, Alixpartners said in a new forecast. High prices and the limited supply of raw materials such as steel and plastic resin are driving up costs and forcing automakers to cut production.

Automakers are set to lose production of 7.7 million vehicles in 2021, new forecasts show. Alixpartners advises automakers on supply chain and other matters.

In May, the firm predicted automakers would lose $ 110 billion in revenue and lose 3.9 million vehicles compared to production plans for the year.

The stark new forecast comes amid warnings from automakers and commercial truck makers that semiconductor shortages and commodity price spikes are not easing as 2021 enters its final months, as industry leaders had hoped for it.

Last week, IHS Markit slashed its global auto industry production outlook for 2021 and 2022.

In the U.S. market, vehicle sales have started to slow as inventory on dealership lots is around 20 days of supply, less than half of normal levels, said Dan Hearsch, general manager of the practice. automobile Alixpartners.

“We initially assumed we would get back to normal and recover volume” in the fourth quarter, Hearsch told Reuters. “It will not arrive.”

Instead, automakers could have tight inventories until late 2022 or early 2023, he said.

Semiconductor supply has been hit in recent months by a wave of COVID in Malaysia https://www.reuters.com/technology/malaysian-chip-makers-still-struggling-meet-demand-association- says-2021-08 -26, which hampered production at major suppliers.

Backlogs at major U.S. ports are hampering efforts by automakers to import more plastic resins and steel, he said.

In response, automakers are committing to longer contracts to lock in supplies, buying up to 40 to 50 weeks in advance, Hearsch said.

“They are committing to things they would never have done a year ago,” he said.

(Reporting by Joe White; Editing by Cynthia Osterman)

Copyright 2021 Thomson Reuters.


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