Automakers to Lose $210B as Supply Chain Disruptions Forecasted for the Year

Consulting firm Alixpartners revealed automakers around the globe could potentially lose $210 billion in revenue this year. Supply chain disruptions have been pointed out as the major cause for loss. This figure is twice as the initial forecast made for this year.

According to the firm, the increasing prices of supply materials including steel and plastic resin, and shortage of parts such a semiconductors will contribute to the high cost of productions which in turn will force automobile manufactures to reduce production levels.

The new data reveals that automakers will have to drop production of $7.7 million vehicles and will lose around $110 billion in revenue in 2021.

Commercial truck manufactures and automakers have already voiced their fears over semiconductor shortages and price hikes, as neither seem to be reducing anytime soon. The U.S has already started seeing a decline in sales as inventories suffer. This means automakers will gave to manage limited inventory systems well into next year or even 2023.

The shortage of semiconductors has been seen in recent months sue to Covid-19 surge in Malaysia which is a leading supplier of the part. On the other hand, U.S ports are experiencing backlogs for resin imports and steel, another contributor to supply chain disruptions.