The car chip shortage that started in late 2020 is expected to continue into the first half of 2021 according to a new report from IHS Markit.
The report quotes J.D. Power and LMC Automotive as forecasting that the global semiconductor shortage will shave 2.5 million units off light-vehicle production in the first quarter of this year. IHS Markit believes the shortage will then ease in the second quarter and ramp back up in the second half of the year.
While the shortage will have a major impact on the auto industry IHS Markit does not believe it will lead to a significant increase in vehicle prices.
“We do not expect the semiconductor shortage to result in a material increase to new vehicle transaction prices in 2021” said IHS Markit analyst Ian Fletcher. “However semiconductor content in new vehicles has been rising steadily for several years and the pricing of some chips has become more expensive recently which will put some upward pressure on vehicle ASPs.”
Fletcher added that the biggest risk to vehicle pricing is if the shortage causes a production shutdown at a major automaker.
“If a major automaker was to experience a production shutdown due to the semiconductor shortage it could lead to a panic buying environment and a surge in new vehicle transaction prices” Fletcher said. “However we do not see this as a likely scenario at this time.”
The IHS Markit report comes as General Motors is reportedly planning to idle production at five North American plants due to the chip shortage.
According to Reuters GM is planning to idle production at plants in Ohio Michigan Kansas and Ontario. The report quotes a GM spokeswoman as saying the company is “working tirelessly” to find other suppliers of the chips.
The chip shortage has also caused a production shutdown at Ford’s plant in Brazil.
It’s unclear when the chip shortage will finally end but IHS Markit believes it will ease in the second quarter and ramp back up in the second half of the year.
What is causing the car chip shortage?
The pandemic has disrupted the global supply chain of semiconductors.
How long will the car chip shortage last?
It is unclear how long the shortage will last.
What cars are affected by the chip shortage?
Almost all cars are affected by the chip shortage in some way.
How is the chip shortage affecting car production?
The chip shortage has forced many carmakers to idle factories or cut production.
What are the consequences of the chip shortage?
The chip shortage could lead to higher car prices and longer wait times for new cars.
How severe is the chip shortage?
The chip shortage is severe and is expected to get worse before it gets better.
Will the chip shortage cause a recession?
It is possible that the chip shortage could cause a recession.
What is being done about the chip shortage?
The government is trying to help companies secure the chips they need.
What can be done to end the chip shortage?
It is unclear what can be done to end the chip shortage.
How long will it take to end the chip shortage?
It is unclear how long it will take to end the chip shortage.
What else is causing the chip shortage?
The pandemic has disrupted the global supply chain of semiconductors.
What can be done to mitigate the effects of the chip shortage?
It is unclear what can be done to mitigate the effects of the chip shortage.
What is the impact of the chip shortage on the economy?
The chip shortage could lead to higher car prices and longer wait times for new cars.
What is the impact of the chip shortage on consumers?
The chip shortage could lead to higher car prices and longer wait times for new cars.
What is the impact of the chip shortage on businesses?
The chip shortage has forced many carmakers to idle factories or cut production.
