Managing Director, Detroit
A steep increase from January’s $61 billion estimate; 3.9 million units of net production to be lost in 2021; companies need to be ‘proactive’ right now, and to create ‘supply-chain resiliency’ longer term
NEW YORK (May 14, 2021) – AlixPartners, the global consulting firm, today released its latest forecast regarding how much the ongoing semiconductor shortage is costing the worldwide automotive industry. AlixPartners’ updated estimate is that the shortage will cost automakers globally $110 billion in lost revenues this year, up markedly from the firm’s estimate in late January of $61 billion. In total, the firm is now forecasting that production of 3.9 million vehicles in total will be lost in 2021.
“The pandemic-induced chip crisis has been exacerbated by events that are normally just bumps in the road for the auto industry, such as a fire in a key chip-making fabrication plant, severe weather in Texas and a drought in Taiwan,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners. “But all these things are now major issues for the industry—which, in turn, has driven home the need to build supply-chain resiliency for the long term. We are helping clients do this with techniques and tools like better long-term forecasting and releasing, strategic buffers, early-warning systems, parts-design to delay application specificity and ways to take a more active role down the supply tiers across many commodities.”
Said Dan Hearsch, a managing director in AlixPartners’ automotive and industrial practice: “There are up to 1,400 chips in a typical vehicle today, and that number is only going to increases as the industry continues its march toward electric vehicles, ever-more connected vehicles and, eventually, autonomous vehicles. So, this really is a critical issue for the industry. But the top priority for companies right now is mitigating the best they can the short-term effects of this disruption, which may include everything from renegotiating contracts to managing the expectations of lenders and investors. The important thing is to be proactive, and to be well-armed with good information and analysis.”
AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges. Our clients include companies, corporate boards, law firms, investment banks, private equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York, and has offices in more than 20 cities around the world. For more information, visit www.alixpartners.com.