Automotive sector's recovery continues to be slowed by ongoing semiconductor shortage

Tue 6 Jul 2021
Posted by: William Barns-Graham
Trade News

car manufacturing

Figures for new UK car registrations were up by 28% in June, but the sector’s rebound from the impact of the pandemic continues to be constrained by a global shortage of semiconductors.

The latest figures from industry body the Society of Motor Manufacturers and Traders (SMMT) showed there were 186,126 registrations in the month, though this fell short of Q2 expectations.

Mike Hawes, CEO of the SMMT, told the Guardian that with the vaccine rollout underway and confidence increasing “the automotive sector is now battling against a ‘long Covid’ of vehicle supply challenges”.

Back of the queue

Time magazine reports that the chip shortage stems from last year’s lockdowns.

Collapsing car sales caused car manufacturers to cut their parts orders, including semiconductors.

Chip manufacturers shifted to other markets and when demand from car producers returned, they could not service it.

Chips are down

A new car can contain more than 1,000 of the semiconductor chips.

The parts shortage is expected to lower global output by 3.9 million vehicles in 2021, or 4.6%.

Us auto giant Ford expects to produce 1.1 million fewer vehicles leading to a $2.5bn loss of earnings. 

'Continued high demand'

US car producers are facing the same supply predicament, according to CNN, but have also seen demand grow.

GM, Toyota, Hyundai and Stellantis – whose marques include Chrysler, Fiat and Opel – all saw year on year rises and Q2 increases on Q1.

“We expect continued high demand in the second half of this year and into 2022,” said General Motors’ (GM) chief economist Elaine Buckberg.