Bad news for them car industry: The one that broke out with the 2020 corona pandemic shortage of semiconductors According to the management consultancy AlixPartners, production will still be slowing down in 2024. So far, car manufacturers and major suppliers have assumed that the massive supply problems will ease over the course of this year and disappear in 2023. According to the study, vehicle production will not reach pre-pandemic levels until 2024 at the earliest.
“Anyone who expects an earlier relaxation in the coming year overlooks the fact that the demand for chips per vehicle is increasing.” Electric cars, the production of which will increase significantly in the next few years, would need around ten times as many chips as combustion models. In addition, the semiconductor producers are not investing in an expansion of the production of so-called analog chips, which the automotive industry urgently needs, but rather in microcontrollers (MCU) in accordance with the high demand from other sectors.
The shortage of semiconductors has been slowing down automobile production worldwide since last year. As a result, the situation, which is unusual for the industry, is that the supply of new cars cannot keep up with demand. According to Alix director Fabian Piontek, this will remain the case for the time being: “Automobile production will not exceed demand again until 2025.” The chip crisis, weaker demand in Eastern Europe due to the Ukrainewar and the trend away from owning a car towards car sharing are dampening the recovery of the European car market, according to the study.
Suppliers benefit less from price increases from car manufacturers
For this year, Alix expects global sales to fall to 78.9 million cars and light vans – from 80.3 million in 2021. The operating profit of the car manufacturers has risen to an average of 12 percent of sales, that of the suppliers to almost 11 percent. Both would have made up for the decline in the Corona crisis to some extent. Because of the increase in raw material costs, suppliers did not benefit to the same extent from the rise in car prices. They are also under strong financial pressure because of the pricing power of car manufacturers, said industry expert Marcus Kleinfeld.
The strongest growth market with an expected increase of seven percent per year will remain the largest car market China. Here are the German car manufacturers – Volkswagen alongside General Motors as the market leader in the volume segment and bmw, Mercedes and Audi dominant in more expensive premium cars – but facing a problem. “The German manufacturers are late with electric cars and are finding it difficult to gain a foothold,” said Piontek. They competed with many local manufacturers who were already selling e-cars for less than 5,000 euros.
According to the study, raw material prices for combustion engines have doubled since 2020 and those for electric cars have almost tripled. The cost of batteries is likely to rise again after years of decline. Lithium iron phosphate batteries could soon be used more frequently in low and medium-priced e-cars. Although they are heavier and offer less range than conventional batteries, they are cheaper and also do not depend on rare earths from unstable regions.
But by 2024 at the latest, the car manufacturers should be able to grant discounts again, said Alix director Fabian Piontek: “The effects of high inflation on consumer behavior are already foreseeable.”