Page 14 - MetalForming February 2022 Special Automotive Issue

Automotive Industry Overview:
Challenges Loom for 2022
Chip shortages, worker short- ages, unpredictable OEM pro- duction schedules and rising prices combined with limited supply of commodities have created a perfect storm plaguing the automotive supply chain, struggling to flex as global light- vehicle production has decreased by 10 to 12 percent, including a 20-per- cent drop in Europe and 19-percent drop in North America. But while North America alone lost nearly 830,000 units of light-vehicle produc- tion in Q3 2021, production increased by 60,000 units over Q2—that accord- ing to LMC Automotive.
At press time, U.S. new-vehicle retail sales in Q4 2021 were projected to reach 2,923,600 units, a 17.7-percent decrease from Q4 2020. For the year, U.S. new- vehicle retail sales for 2021 were pro- jected to reach 13,074,500 units, a 6.5- percent increase from 2020 but some 2 million off from 2019.
In a recent press release from J.D. Power, Thomas King, president of its data and analytics division, notes that, “Despite inventory shortages con- straining December sales volumes, there are several good news stories for the industry. Retail inventory is show-
ing some improvement, tracking at just more than one million units for the first time since July and transaction prices and retailer profits are at record highs.”
“Demand is not off at all,” adds Michelle Krebs, an analyst at Cox Auto- motive. “What is off is sales, because the inventory doesn’t exist.”
While the semiconductor shortage is expected to persist well into 2022, there does seem to be some light at the end of the tunnel, as GM raised its full-year financial outlook to $14 bil- lion, from a previous guidance of $11.5 to $13.5 billion in adjusted EBIT, claim- ing that the revision is due to improving supplies of semiconductors. Likewise, Volvo Cars, in its first quarterly report since going public, stated that semi- conductor supplies have improved month over month since September. IHS Markit analyst Phil Amsrud said recently in an AP report that while chip supplies won’t improve immediately, “we’re seeing 2022 as being an improve- ment over 2021.”
“The pace of plant shutdowns in North America has slowed from pre- vious months,” notes a December 2021 LMC Automotive report, “and we have
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The coming year most certainly will be challenging, but if consumers remain optimistic and demand continues, the automotive- industry’s recovery is expected to remain intact. Yet market conditions have suppliers on edge, grappling with the dramatic pace of industry change. Here’s a look at what lies ahead.
BY BRAD F. KUVIN, EDITORIAL DIRECTOR
12 MetalForming/February 2022