Computer Chip Shortage Could Drag Through 2022, Prolonging High Prices

The present supply of computer chips may be longer than anticipated and result in a shortage of new trucks and cars and, consequently, price increases that could last through the following year, as per LMC Automotive.

“As we approach the end of 2021, the impact of the semiconductor shortage on the auto industry has yet to peak, contrary to initial expectations of this happening by the end of the second quarter,” said Jeff Schuster, president, Americas Operation & Global Vehicle Forecasting.

Analysts from the auto industry initially believed that the chips shortage was going to end in June. Then it was by the end of 2021, and then the first half of 2022. In the opinion of LMC Automotive, it could last through the entire year before the global auto manufacturing industry returns to pre-pandemic levels.

LMC is now predicting that worldwide production of light vehicles for 2021 is “only marginally better” than 2020, when shutdowns of businesses caused by the coronavirus epidemic disrupted auto production lines. “Light” vehicles are passenger vehicles and light trucks, not including medium- and heavy-duty trucks such as 18-wheelers.

Comparing to expectations three months prior, LMC Automotive said six million units had cut its global auto light-vehicle production forecast for 2021 at the figure of 81 million. As of June, the consultancy and analysis firm had predicted global output in the range of 87.5 million.

“Not only has the impact [of the shortage] intensified in the last two months, but the hope of a return to pre-pandemic situations and a full recovery in early 2022 has all but evaporated,” Schuster stated in a blog post from a few days ago.

LMC Automotive has also shaved its 2022 light-vehicle global forecast by 8% compared to its projections at the edge of the second quarter, which was 85 million, the firm announced.

Additionally, Auto Forecast Solutions, Chester Springs, Pa., has stated that as of September. 21, the company anticipates the chip shortage to decrease North American production by about 2 million units unlikely to be re-usable, and 500,000 more it believes are “at risk.”

Incorporating a large number of vehicles from the new vehicle inventory has increased prices. The shortage of cars has cut into the monthly U.S. auto sales.

As per Motor Intelligence, U.S. auto sales were approximately 1.1 million last month, 17.2 percent less than August 2020.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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