Major Japanese chip plant closure not expected resolved until July
Ford expected to miss 1.1 million units of production this year
A new report says that vehicle output at Ford could be cut in half this quarter as a result of the ongoing shortage of microchips for use in vehicles. And the automaker’s CEO says it will get worse.
Some Ford dealers were told last week that they would get no meaningful amounts of new inventory delivered to them until at least August, says Automotive News. While in years past dealers may have had some inventory to help cover this shortfall, many of them now are already running low. The report says that many dealers expect to be out of vehicles long before August at current rates.
Initially, the report reads, the shortage of microchips that is affecting consumer electronics and vehicle production around the world, was expected to cut just a few hundred thousand units. Now it’s expected to cost Ford more than 1.1 million units and cut $2.5 billion from the bottom line. A company that was readying to see the rewards of a host of new and high-interest models is now expecting to see profits shrink.
“There are more whitewater moments ahead for us that we have to navigate,” said company CEO Jim Farley, on an investor call recently.
A fire at supplier Renesas in Japan has worsened the issue. Nine of Ford’s top suppliers source from there, said the report, and it’s not expected to be back to full capacity until July.
Now, the report says, Ford has 33 days supply of retail vehicles, and it expects that to tighten. Meanwhile, more than 22,000 nearly completed vehicles are waiting for their chips to come in so they can be finished and shipped.
Until the shortage is resolved, expect new car inventories to get tighter while used vehicle prices rise.