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Semiconductor component shortage could cost American automakers a third of annual revenue
North American automakers could be hit this year not only by global semiconductor shortages, but also by the impact of frost-caused power outages and logistics disruptions. GM and Ford, according to experts’ forecasts, will have to cut annual income by a third.
Image source: Ford Motor
Representatives of Moody’s Investor Service shared their views on this topic, as Bloomberg notes. The business of automakers is already not distinguished by high margins, and the forced decline in production volumes and increased costs for the purchase of scarce components will put additional pressure on the profit margin. For General Motors corporation it may drop to 3.4% by the end of the year, and for Ford Motor company — up to 1.8%.
The pre-tax revenues of both companies will also noticeably decrease compared to last year, as experts are convinced. The magnitude of the decline may exceed 30%, GM will eventually lose $ 2 billion, and Ford will lose approximately $ 2.5 billion in revenues. Ford will suspend operations in Canada next week, where crossovers are assembled, because there are not enough chips to make them. Downtime will last one week, but this is not the only example of such measures since the end of last year. In the first quarter, North American enterprises of all brands may reduce car production by 350 thousand cars, as weather disasters will add to the shortage of chips. The consequences of these phenomena will be felt in the second quarter.