Many of the US auto manufacturers are reporting profits for Q1 of 2021, they all agree that this is not going to be extrapolate out for the rest of this year and to expect major decreases in earnings moving forward. The biggest hurdle for these manufacturers is still the worldwide chip shortage. Auto manufacturers are competing with several other industries for an incredibly limited supply of microchips. With the stock that was on the ground is quickly getting bought up and some replacement inventory is not even scheduled to be built until late Q3 and Q4 this year, dealer inventories are hitting all time lows as it seems consumers are finally looking to purchase new vehicles. Dealerships across the country are preparing to take a huge hit for the next 3-5 months.
Intel’s CEO warns that the chip shortage will last several more years. This is what we expect as well and is due to a lot of factors, one being that more industries that in the past didn’t need microchips are now requiring microchips in ever increasing numbers. This paired with natural disasters made for a very hard hit to the auto industry. Plans to increase production and build manufacturing facilities can take several years even with millions subsidised by the government and for this reason it is unclear how long this problem will persist.
Problems with the availability of rubber seems to be the next hurdle auto manufacturers are going to have to navigate. The rubber industry has not only had setbacks from covid related issues but also slow shipping lanes, stockpiling by China, and a leaf disease in some of the plants used to make rubber. Prices for tires look to be on the rise and auto manufacturers are rushing to secure their needed supplies now as future availability is looking scarser.
The US indicts two senior diesel managers at Stellantis. They allegedly programed several features into their 3.0-liter diesel engine used from 2014-2016 to fool the EPA. These features are said to be a control on the amount of NOx the engine would produce under testing parameters and increase the amount when the vehicle was driven normally. Indictments seem to be a recurring theme with Stellantis who was formerly FCA as earlier this year former employees were charged with conspiracy in similar conditions, trying to bribe or fool the government’s regulatory bodies.
Fleet order banks closed for Suburban and F-150 order banks are closing next week. If you need to place orders the earlier the better.