U.S. Auto Part Makers Brace For A Bumpy Ride As Chip Shortage To Intensify

Highlights
U.S. auto parts suppliers warned of more production cuts at major automakers as a global semiconductor chip shortage worsens before easing in the second half of the year and aiding in a partial recovery of lost sales.
The chip shortage came at an inopportune time for automakers as demand rebounded from pandemic lows due to low interest rates and consumers' preference for personal transport amid the health crisis.
"We've embedded a 3% reduction in industry production to factor in what we're anticipating and expecting as further announced downtime that hasn't been publicly announced at this point," Lear Corp Chief Financial Officer Jason Cardew said on Friday.
Also Read: BMW Confirms Its 2021 Targets Despite Worsening Chip Shortages
"We have line of sight on a more meaningful reduction (in production) in the second quarter than IHS Markit and others are projecting," Cardew said.

Ford Motor Company has said the chip shortage would halve its vehicle output in the second quarter.
Ford Motor Co, a major customer for Lear and peers including BorgWarner and Magna International, has said the chip shortage would halve its vehicle output in the second quarter.
Europe's Volkswagen, another customer for the three suppliers, has said it is in "crisis mode" over the lack of badly needed automotive chips, with the shortage intensifying and hitting its profits in the second quarter.
Lear, which makes automotive seating, cut its global vehicle production forecast to a 9% rise, from up to 12% it had predicted at the beginning of the year, while also expecting second-quarter revenue to fall 9% from the first.
Auto suppliers also cautioned that the pain from the shortage could linger at least until the next year.
"We don't expect the supply/demand imbalance to fully recover to normalized levels until 2022," said Joseph Massaro, chief financial officer of Aptiv, a maker of advanced driver assistance systems, vehicle computers and high-voltage cabling.
Auto suppliers are also grappling with pressure on their margins from rising costs of key inputs such as steel and copper.
However, many expect to offset some of those costs as automaker customers focus on building higher margin, more profitable pickup trucks and sport utility vehicles.

Auto suppliers also cautioned that the pain from the shortage could linger at least until the next year.
Also Read: GM's Barra Sees A More Profitable Future Through The Haze Of Chip Shortage
"On the biggest raw material purchases, we have about 60% pass through with our customers," BorgWarner Chief Executive Officer Frederic Lissalde said.
Still, most suppliers have raised or reaffirmed their full-year financial outlooks, thanks to the better-than-expected performance in the first quarter.
Analysts highlighted risks associated with the production outlooks from some suppliers as chip demand rises from other sectors such as enterprise, cloud and consumer electronics following speedy COVID-19 vaccinations and economies reopening.
"The question in my mind is can this (production loss) be made up later on in the year. And that's really an unknown," Magna Chief Financial Officer Vincent Galifi said.
Great Deals on Used Cars
View All Used Cars
- 49,360 km
- Diesel
- Manual

- 1,000 km
- Petrol
- Manual

- 67,725 km
- Diesel
- Automatic

- 50,000 km
- Diesel
- Automatic

- 62,246 km
- Petrol
- Automatic

- 74,440 km
- Petrol
- Manual

- 67,000 km
- Diesel
- Manual

- 50,561 km
- Petrol
- Manual

- 57,000 km
- Petrol
- Manual

- 25,000 km
- Petrol
- Automatic
Upcoming Cars










Upcoming Bikes










Explore More
Latest News
Related Articles

-5653 second ago
The ministry aims to introduce free medical treatment for injured accident victims in the next three to four months

-4033 second ago
Greaves Electric Mobility has collaborated with Kedia Organisation and is setting up its first dealership in Teku, Kathmandu

-3215 second ago
With the launch slated for 2024, the Lamborghini Urus PHEV was spotted testing at the gruelling Nurburgring race track.

-2818 second ago
The Urban SUV concept is the first in a line of 6 EVs, which the company says will be revealed toward the first half of 2024

12 minutes ago
CFMoto revealed a new mid-size in-line triple engine at EICMA 2023 and now the specifications of the engine have been revealed.

1 hour ago
India Kawasaki is all set to revive a popular motorcycle name at the upcoming India Bike Week 2023. Hint! It is likely to be a cruiser motorcycle, that was on sale in India many years ago.

3 hours ago
The Mercedes-Maybach GLS 600 was gifted to the actor by her husband, Vignesh Shivan on her birthday

3 hours ago
Hyundai has presented the Ioniq 5 to Shah Rukh Khan to commemorate the 25-year-long association with the brand. It will be the first electric vehicle in his car collection.

5 hours ago
The recall, initiated due to concerns over the manufacturing of certain components, aims to inspect and replace the affected parts

2 months ago
Tata Motors today released an official statement clarifying that the company is running its production operations at the Pune plant with a limited workforce, in line with the current COVID-19 norms, in Maharashtra.

5 months ago
Of the 3.87 lakh cars and SUVs Maruti Suzuki is yet to deliver, over 95,000 orders are for the Ertiga MPV.
10 months ago
Wolfspeed is reportedly planning to build a chip factory in Germany for more than 2 billion euros ($2.17 billion).

10 months ago
The world's largest contract chipmaker said its capital expenditure in 2023 would decrease to $32-36 billion from $36.3 billion in 2022.
