Revenue of automakers to decrease by $210B due to chip shortage

With no end in sight, the semiconductor chip shortage is now expected to cost the global automotive industry $210 billion in revenue in 2021, according to consulting firm AlixPartners, Report informs referring to CNBC.

The forecast is almost double it previous projection of $110 billion in May. The New York-based firm released an initial forecast of $60.6 billion in late January when the parts problem started causing automakers to cut production at plants.

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, in a statement.

AlixPartners is now forecasting that 7.7 million units of production will be lost in 2021, up from 3.9 million in its May forecast.

The biggest hit to production occurred in the second quarter, according to Dan Hearsch, a managing director in the automotive and industrial practice at AlixPartners.

Automakers across the globe, including Ford Motor and General Motors, had warned of massive earnings cuts this year due to the chip shortage. But some, if not much, of those losses have been offset by resilient consumer demand and higher profits from record vehicle prices.