This upcoming Halloween weekend will be characterised by the usual sugary treats, but the prospects for the North American automotive industry are far from sweet.
Although the first pandemic-related closure in North America was over nineteen months ago, the spectre of the pandemic continues to cast a shadow over the automotive industry. Shortages – particularly of workers and semiconductors – related to last year’s outbreak of COVID-19 have continued to ravage the industry this year. The third quarter proved to be even more devastating than either the first or second in terms of disruptions. Nearly 830,000 units of production were lost in North America during Q3, an increase of 60,000 units when compared with Q2.
As a result of this unprecedented level of downtime, total Light Vehicle production in North America fell to just 909,000 units in September, with most automakers reporting actuals. In the 2012-2020 period, production in the month of September was typically in the region of 1.4 million units, meaning that this year’s result was one-third lower than the average.
September also marked the lowest production month on record for the region since July 2011, excluding April and May 2020, when pandemic-induced closures brought production to a complete halt. Most of the losses during the month were due to chip-related stoppages. However, the extended shutdown of the GM Orion plant (due to a battery pack recall) and a two-week shutdown at Ford’s Flat Rock facility (due to a natural gas leak) also caused sizeable losses. Unfortunately, October looks set to be only marginally better than September, given the ongoing disruptions to production.
To add to the troubles facing the industry, total available inventory in the US at the beginning of October was at a record low. Inventory sat at just 972,000 units, the lowest level since our partner Wards Intelligence began tracking inventory levels in 1985. In other words, those consumers eyeing up a new vehicle will be faced with depleted showrooms and far fewer choices than would normally be the case.
This autumn has been challenging for the automotive industry. Mounting headwinds – ranging from the continuing chip shortage to crammed ports waiting to unload parts – continue to complicate an already difficult situation. Although the picture should have improved by the time Halloween rolls around again next year, there are bound to be pitfalls ahead.