Whether or not the automotive car shortage is over in 2022 will depend on the future of the automotive industry. S&P Global Mobility downgraded its light vehicle production outlook, and GM and Chrysler have both announced they have more than ninety-eight days’ worth of vehicles sitting in their unfinished factories.
Chrysler has the most inventory at 98 days
Compared to pre-pandemic times, new vehicle inventory is low. But how does it compare to other brands? This is a question that can be answered by looking at the various factors involved. There are a few that stand out.
The first is a slew of non-luxury brands. The lowest inventories were seen in the non-luxury sector. Brands such as Honda, Kia, and Toyota had low inventories. The top five non-luxury brands had a combined inventory of a little more than nine days.
The next top five were non-luxury brands with a combined inventory of a little more over a week. The highest inventories were seen in the luxury sector. The top five luxury brands had a combined inventory of over one month.
The biggest news is that Chrysler’s inventory is now 98 days. This is an improvement over the previous month’s record of 94 days. Compared to a year ago, this is a slight improvement. And it could be a sign that the supply chain has stabilized enough for a slow recovery.
GM has 95,000 unfinished vehicles
GM recently disclosed that it has 95,000 unfinished vehicles sitting in storage. These vehicles are partially built, but GM is unable to deliver them because the components needed are missing. This is due to a global semiconductor chip shortage that has slowed new car production worldwide.
The company hasn’t provided a specific forecast on how many of these vehicles will be finished in the coming year. However, it has stated that it will complete most of them by the end of the year. This is a large number, and it can have a massive impact on working capital.
GM has also said that it has been dealing with supply shortages over the past three months. However, it has managed to keep the assembly lines running. However, the problem has impacted many of the company’s popular segments.
The semiconductor shortage has also had a negative effect on the automotive industry in general. The supply chain for parts has been disrupted, resulting in lower wholesale numbers.
S&P Global Mobility downgrades light vehicle production outlook
Continuing uncertainty and weak equity markets are dampening consumer demand. In turn, automakers’ forecasts for 2022 are being tempered. The latest outlook from S&P Global Mobility downgrades light vehicle production to 81.6 million units from 88.5 million in the previous forecast.
The April 2022 forecast update includes notable reductions across a number of markets. It addresses the impact of high raw material prices, a slowdown in demand, and increasing economic uncertainty. In addition, several vehicle makers have announced cancellations of volumes under long-term contracts.
The war in Ukraine has added to automakers’ production challenges. Volkswagen and BMW have faced production and parts problems. OEMs in Europe and North America continue to struggle with component supplies.
In the short term, the impact of the war in Ukraine is most likely to be felt in the European market. Volkswagen CEO Herbert Diess said the conflict has put the outlook for 2022 in doubt. He also cited supply chain disruptions exacerbated by the Ukraine-Russia conflict.
Future direction of the automotive manufacturing sector
Changing consumer preferences and rising technologies are driving the transformation of the automotive manufacturing sector. The industry is looking to produce cars that are efficient, sustainable and high-quality. It is also taking steps to reduce emissions.
Automotive manufacturers are exploring new materials and innovative new methods. They are also searching for ways to produce lighter, stronger parts. These changes will impact profit margins. Auto manufacturers and suppliers must think differently about how they source components. They also need to reskill their workforces and change the ways they attract and retire workers.
The auto industry is experiencing its most exciting period of growth in history. New technologies are creating new job opportunities and driving consumer demand. However, these innovations are also creating challenges. Auto manufacturers are investing heavily in R&D to ensure they have the capacity to take on these innovations.
One of the key challenges for auto manufacturers is the demand for a wide variety of vehicles. To meet this demand, automakers must develop a smart manufacturing network. They will also need to consider whether they should create components themselves or work with expert third party companies.
