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Computer chip shortage continues to plague auto industry

RAM.jpeg
Stellantis
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U.S. automakers are seeing a ripple effect of production line slow-downs and shut-downs due to the ongoing computer chip shortage.

Autotrader Senior Analyst Michelle Krebs says a major reason for the shortage is because automakers canceled orders when the pandemic began last year, as production lines were shut down initially.

She says the companies did not expect demand for vehicles to surge back so quickly.

Now, they're at the back of the line, as chip suppliers fill orders for other high-demand goods, like i-Phones, laptops, and video games.

"Until now, automakers have actually  done a really good job of re-allocating chips to popular vehicles that make them more money, from vehicles that aren't as popular and have high inventories," says Krebs.  "But what we've seen of late is it's now hitting the pickup truck market."

Stellantis, which includes the former Fiat Chrysler, is doing partial assemblies and holding back shipping of its RAM pickups until the semiconductor chips needed become available. Ford is doing the same for its F-150 trucks.

Krebs says it's possible the companies could make up their losses once the chips shortage eases, if enough pent-up demand materializes.

Biden administration officials have been meeting with their counterparts in overseas nations where the vast majority of chips are made, to urge them to push companies to speed up production and make computer chips for autos more of a priority.

There are also discussions in the industry about the possibility, long-term, of expanding computer chip manufacturing in the U.S.