Chip Crisis Dashes Industry's Hopes for Post-Pandemic Sales Recovery

First Up 10/06/21

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Chip Crisis Dashes Industry's Hopes for Post-Pandemic Sales Recovery

Hopes that 2021 would recover much of the auto sales lost to the pandemic in 2020 are fading as the semiconductor shortage continues to bring widespread factory stoppages, reports Automotive News. Last month, IHS Markit, which many automakers use as their benchmark for production forecasting, said it was trimming its production forecast by 6.2 percent, or 5 million units, to 75.8 million for 2021. "The outlook for Q4 now reflects heightened risk as challenges to the supply chain – primarily semiconductors – remain entrenched,” IHS analyst Mark Fulthorpe wrote. In its most recent note to investors, IHS said that 9.5 to 11 million units could be lost over the full year. In contrast to earlier statements from automakers and analysts expecting a recovery in the second half of 2021, IHS said Monday that the disruption could continue into the first half of 2022. Read more here (Source: Automotive News).  

EVs and Hybrids Beginning to Move Up on Consumer Wish Lists

Consumer preferences are always shifting, reports The Detroit Bureau. In the case of the auto industry, this means sales of cars with internal combustion engines may have hit their peak in 2019. Electric vehicle and hybrid sales have risen 50% in 2021, according to IHS Markit. Tom Libby, an IHS analyst who studies brand loyalty, said during a recent seminar, data collected this year indicates there has been a migration to hybrids and electric vehicles. Moreover, the loyalty of buyers purchasing vehicles with alternative powertrains is very high. Part of the high loyalty numbers reflect the loyalty of Tesla’s buyers, but it also extends to other brands, he said. Even with the semiconductor shortage, one trend apparent this year is the growing acceptance of electrified vehicles. Toyota, Hyundai, Volvo, and Ford introduced several electrified vehicles this year. Overall the numbers for a variety of hybrid and battery electric models are quite high when measured against gasoline engines, Libby said. Read more here (Source: The Detroit Bureau). 

Volkswagen Mexico Extends Partial Production Stop at Puebla Plant

The Mexican unit of German automaker Volkswagen will extend a production stop at one of its segments in a plant at the central state of Puebla that produces the popular Jetta model from Oct. 6 to 15, a labor union document showed on Tuesday. According to Reuters, it comes as the industry is facing a worldwide semiconductor shortage after manufacturers shifted production toward laptops, cell phones and video games during the pandemic. Volkswagen in Mexico did not immediately respond to a request for comment. Automakers such as General Motors, Volkswagen and Ford have suspended operations several times this year. In early September, the United States and Mexico agreed to create a working group on supply chains of semiconductor manufacturers to promote their proper functioning and reduce the region's vulnerability to the lack of supplies. Read more here (Source: Reuters). 

GM Hires First-Ever Digital Chief

General Motors on Tuesday named its first chief digital officer, Edward Kummer, a longtime marketing leader who has held posts at Nordstrom, Oakley, and Walt Disney Co. Kummer's appointment is effective Oct. 16, reports Automotive News. He will be responsible for building and delivering GM's digital business and will lead a new team to accelerate software investments to improve the customer experience. Kummer, 58, will report to GM President Mark Reuss. Kummer was most recently president of Nordstrom Rack's online business and Nordstrom's HauteLook brand since 2019, according to his LinkedIn profile. He also spent 18 years at Walt Disney Co. in various leadership roles. In his new position, Kummer will lead commercial and strategic investments in the digital space. Read more here (Source: Automotive News).

Up, Up, Up. Gas Prices Keep Rising Across the Country to Highest Levels Since 2014

The price of regular unleaded gas rose two cents from a week ago to an average of $3.20, a level not seen since October 2014, according to the American Automobile Association. USA Today reports that while that's a slight uptick in the short term, the average price at the pump to fill a typical vehicle is costing a traveler about $13 more than a year ago or roughly the price of a pizza. However, average prices for unleaded gas have a way to go to hit the record high of $4.11 on July 17, 2008, records show.  The probable causes for the current increase are a slight uptick in demand and the high price of crude oil. OPEC previously decided in July to boost crude output by 400,000 barrels each month until at least April 2022. Read more here (Source: USA Today). 

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