Chip Shortage Could Plague Auto Industry for Next Year.

Supply chain issues that have ravaged the Auto Industry over the past year likely won’t be resolved until 2022. The information was revealed by AutoNation CEO Mike Jackson. Carmakers including Ford, General Motors, and Toyota were forced to cut production this year as supply chain disruptions due to the Covid-19 pandemic. It eventually resulted in a global chip shortage and proved to be a hefty loss period for the automakers across the United States.

“It’s a force majeure at the moment because the chips simply aren’t there and they’re not going to be there in any meaningful way for some time compared to demand,” Jackson said on his company’s first-quarter earnings call on Tuesday.  However, the industry was already facing a shortage in production before the pandemic emerged and the woes have worsened ever since. The plants were forced to shut down for up to two months in the early days of the Covid-19 induced lockdowns.

The impact of lower production has been exacerbated as more people have worked from home and avoided any sort of traversing and public transportation during the pandemic. It has made the demand go steeping low which has been a stumbling block for the companies in the auto industry. President Joe Biden and executives from Detroit’s Big Three automakers met on April 12 to discuss ways to remedy or reinforce the chip shortage.  The same day after the meeting Intel and the Biden Administration announced plans to tackle the problems with the hopes of pulling the plug on the chip shortage and ramping up the production.

Even with those efforts, Auto Industry CEO Mike Jackson believes there to be more demand than supply for the remainder of this year. He noted that it has been very interesting to see the number of incoming new car shipments that are presold.