Automakers are killing deals and focusing production on high-demand models as a result of the semiconductor shortage.
The automotive industry has been hit with by a shortage of semiconductors. The shortage began during the early days of the pandemic, when production was hit by lockdowns and COVID-19 outbreaks. Most recently, the shortage was exacerbated by an outbreak in Malaysia, impacting a region that supplies automotive semiconductors.
Virtually every major automaker has been impacted, with companies pausing production or shipping vehicles without their full compliment of chips. Despite the challenges, some companies are seeing upsides, namely the ability to kill deal-making as a result of the high demand caused by decreased production.
According to Bloomberg, Mark Wakefield, a consultant at AlixPartners, said automakers are making $3,000 more per car, and as much as $10,000 on pickups, SUVS and other lucrative models. Analysts see this as a positive change, a healthy departure from the days of overproducing and selling inventory for barely a profit.
“It’s a fantastic opportunity,” Wakefield said. “Everyone’s been forced into the cooperation box because of the supply situation.’’