Ford, Chevrolet to cut productions by 370,000 on global microchip shortage
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As carmakers across the globe struggle to meet the rising demand for cars, recent data by BuyShares show that the United States car brands, Ford and Chevrolet, have taken the worst hit from a global microchip shortage, with almost 370,000 vehicles taken out of production as of May 2021.
The critical situation of microchip shortage in the auto-manufacturing industry has led to the closures of some plants, leaving dealers with a shrinking inventory.
The reason for this may not be far fetched as the fire at an automotive chip plant in Japan, tighter supply chains after the Ever Given grounding in the Suez Canal, and the lack of oil for the plastic used in chips all came as a new shock after the pandemic, thus, causing carmakers huge problems with sourcing for the microchips.
An AutoForecast Solutions report showed that Ford had been the hardest hit by the global microchip shortage, with the company taking over 230,000 vehicles out of production. Chevrolet took the second-hardest hit among the US carmakers, with its production cut down by 140,800 cars. Jeep follows with around 138,700, respectively.
A further analysis of the report from AutoForecast Solutions on the worst impacted models, shows that the Ford F-Series pickup comes first, with its production reduced by 109,710 units. Statistics show that 98,584 fewer Jeep Cherokees have been planned, while Chevrolet Equinox production is anticipated to fall by 81,833, ranking as the third worst impacted model.
However, the global microchip shortage and the massive production cuts significantly impacted US carmakers’ stock prices where data from YCharts show that the market capitalization of Ford shed $7.8 billion to close at $55.9 billion in the second week of July from $63.9 billion in June. Also, statistics show that the market cap of the US market leader in terms of light vehicle sales plunged by $8.4 billion in the last month as General Motors, the US multinational corporation that manufactures Chevrolet, Buick, GMC, and Cadillac, has taken an even heavier hit while Chrysler Stellantis lost $2.6 billion in market cap in this period.
Meanwhile, statistics also show the combined market cap of General Motors, Ford, and Chrysler Stellantis as the “Big Three” US carmakers plunged by $18.8 billion in the last month.
When car manufacturing factories in the United States and across the globe closed in the early days of the pandemic last spring, several carmakers made what has turned out to be a critical error as they cancelled orders for the microchips essential to the manufacture and operation of new cars.
However, the demand for new cars has now returned, but the microchips, which are vital for everything from a vehicle’s onboard computer to safety features and infotainment system, have been in short supply around the world for months, and the problem could take a couple of years to resolve.