Global Chip Shortage - Things to do and not to do during this?
The silicon chips industry is undergoing a massive shortage globally affecting majorly Vehicle industry (EV and Traditional) mostly across the globe.
General Motors halted their production of trucks, Honda has already paused the production at most of its facilities, Toyota halted its production at half of its facilities in Japan and the USA and Volkswagon halted the production in Europe, Russia, USA, and other facilities.
According to global consulting firm AlixPartners, the current chip shortages phenomenon could cost the global auto industry $14.3 billion or more in revenues in the first quarter and $60.6 billion for the year.
This loss in revenues of major auto manufacturers could put further pressure on the overall auto industry and auto maker's stocks, so tread carefully when trading in EV until things are more clear and we hear more about Chip shortages in months to come.
Auto dealers are already complaining about shortages in their stock and not being able to meet the demand. According to an auto dealer who used to have a stock of over 200 trucks, has only 25 Trucks in the stock, which makes it approximately 12.5% of availability.
The total expected shortfall in new vehicles for 2021 for all automakers is projected at 1.6 million units.
- Stellantis which includes
- VW Group which includes (VW, Audi, Porsche)
Pricing will be impacted?
It is expected that there will be strong support for the price to have no impact on new cars, but a shortage of supply if extended beyond May might fluctuate the Priceline for many cars. It has also been reported that there is a surge in prices for used cars amid this shortage.
For how long?
Chip shortage is a result of increased demand. While the chip manufacturing industry is working towards meeting increased demand, they are unlikely to meet it in 2021. Q3 in 2021 is expected to have provided some cushion to this shortage but not fully eliminate it.
Things TODO during this shortage?
Sell your car for profit: If you want to make some money with that extra car you have, now is the time to make some money on selling a used car. There is an increase in the prices of used cars.
Buy the leased car: If you are leasing a car and the lease is about to end within the next 3-6 months, you should buy this car instead of returning it.
Things TO-NOT-DO during this shortage?
Buy a used car: If you do not own a car, buying a used car at this moment is going to cost you more than it would have in normal circumstances. Buy a new car instead as prices seem to be intact for now.
Buy Auto Industry Stocks: They are destined to go down for a while until positivity in the market comes back about chip manufacturing. This goes for EV industry (TSLA, NIO, XPEV, LUCID, etc.)