Impact Global Semiconductor Shortage Impact Assessment on Light Vehicle Production
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Impact
Global Semiconductor Shortage Impact
Assessment on Light Vehicle Production
LMC Automotive
14 January 2021
© 2021 LMC Automotive Limited, All Rights Reserved.Global Impact Summary
▪ A global semiconductor shortage, brought on by the COVID-19 pandemic, is impacting Light Vehicle
production around the globe. The issue first came to light in late-2020 in India and China but, given
the interconnectivity of the global supply chain, it has quickly spread to other regions. The situation is
very fluid at this point, with many OEMs being impacted globally.
▪ In general, we expect OEMs to secure other sources and/or shift chip inventory around (where
possible) to more profitable vehicles or those in higher demand. But that may not always be the case
depending on the specifics of the chip. In addition, some OEMs began stockpiling chips late last year
to protect production levels, so the shortage will not impact each OEM equally.
▪ Our December 2020 Global Light Vehicle Production Forecast expected output to rebound by 16%
(+13mn units) to 87.6mn units driven by inventory replenishment and recovery demand. Risks
include a prolonged second wave of the virus and capacity constraints in the short-term.
▪ Downside risk to the 2021 forecast is greatest in Q1 with potential for 1.1mn to 1.8mn unit shortfall
from our current forecast, depending on the severity and scope of the shortage. Risk remains for
further disruption in Q2. The risk is expected to be lower, and should be alleviated, by the end of Q2,
with the potential for up to 900k of additional volume under threat.
▪ With some H2 catchup expected, total 2021 downside risk ranges from 1.3mn to 2.2mn units. Output
could potentially fall to the 85.0mn unit level. 2022 production is expected to continue to rebound to
pre-COVID levels at 92.2mn units.
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 2Current global production baseline forecast
▪ Production was expected to
increase by 16% in 2021, with
+16% rebuilding inventory to meet
87.6 with stronger demand.
2.2 Risk ▪ Recovery risks include
pandemic disruptions and
-16%
95.7 short-term capacity
90.4 92.2
88.8 constraints.
85.4
74.7 ▪ Chip shortage could have a
lasting impact on the year of
up to 2.2mn units.
2019 2020 2020 2021 2022 2023
Pre ▪ Pre-COVID-19 levels expected
COVID-19 by 2022 as industry builds
inventory hedge.
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 3Global Production semiconductor shortage risk
Global LV Production Volume Forecast ▪ US impact could be up to 10%
in Q1 for a market already very
24 lean on inventory – demand
Millions
Mild Impact
also at risk.
22
▪ China expected down 10% in
20 January with outlook then
Severe Impact
improving. Some chip stocks
18
being diverted from Europe.
Risk Range
16
Q1 - 1.1 to -1.8mn ▪ Korea may avoid any
Q2 - 0.4 to - 0.9mn
14 measurable impact, as some
2021 -1.3 to -2.2mn (up to -2.5%) stockpiling took place and chip
12 production ramps up.
4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21
▪ Europe does have some
inventory as a buffer, but impact
also expected to be
widespread.
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 4Inventory situation differs across markets
US Light Vehicle Days' Supply China Change in Stock Europe Light Vehicle Days' Supply
150 4 3 114
120 6
Millions
119
Millions
Production
94 3 2 100 78 5
100 877678
6969
76
67 676066 61 66 73 67
80 60 65 59 59 61 67 4
59 55 51 50 59 55 5748 2 1 Retail Sales 60 3
50 40 2
1 0
20 1
0 0 -1 0 0
Yr-Ago Days' Supply Days' Supply Days' Supply Inventory
▪ US days’ supply was holding in 50-60-day range but fell below 50 as inventory levels continue to
be constrained. Will not likely see normal inventory levels until mid-2021, or later now given chip
shortage.
▪ China was destocking heading into the pandemic. Given rapid rebound and restart in production,
inventory has begun building again relative to retail demand.
▪ Europe saw a supply spike ahead of lockdowns but has since balanced supply and demand. With
strict lockdowns and higher case counts, demand has cooled and stock has been increasing.
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 5Asia-Pacific (less China) ▪ Annual 2021 output could be impacted by over 630k
units (-3.0%) with Japan and India production seen
as the greatest risk.
▪ India: Loss expected to be significant with both
suppliers and OEMs impacted. Mahindra &
-5.2% Mahindra already announced Q1 production cuts.
The situation is still fluid as to the extent of the
impact – potential for a 12% loss in Q1 and 10%
Millions
loss in Q2.
Q1 2021 Q1 2021
Prior Forecast Potential ▪ Japan: An October 2020 plant fire at semiconductor
supplier Asahi Kasei Microsystem has impacted chip
supply. Also seeing some chip diversions to the
gaming industry from autos. Honda and RNM have
already reduced Q1 plans due to the shortage.
-8.5% ▪ Korea: No major impact expected given Korea has
two of the largest semiconductor producers in the
Millions
world, Samsung and SK Hynix with both ramping up
chip production. GM Korea is a downside risk, given
Q1 2021 Q1 2021
Prior Forecast Potential
their global sourcing footprint.
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 6China ▪ Annual 2021 output could be impacted by over 500k
units (-2.0%), but near normal levels and a 1-3%
downside risk expected by Q2.
6.45
▪ Shanghai VW is expected to be hit hard in Q1 with
-4.8% 25% production loss in January. FAW could see
similar declines. Other OEMs (GM, Great Wall, etc.)
are expected to be less impacted.
Millions
▪ VW’s situation is heightened given its use of a
customised ESP chip, something that is not
Q1 2021 Q1 2021
Prior Forecast Potential commonly shared with other OEMs.
▪ China production in January is expected to be down
6.45
10% from our December 2020 forecast. However,
given current inventory levels, demand is not
-7.3% expected to greatly impacted.
▪ Tier 1 suppliers are believed to have sourced
Millions
inventory from Europe to secure supply in the
Chinese market, which may help to ease the
Q1 2021 Q1 2021 shortage in China.
Prior Forecast Potential
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 7Europe ▪ Annual 2021 output could be impacted by over 430k
units (-2.2%), but YoY growth expected in H2.
▪ Germany: VW has scaled back production of the
Volkswagen Golf at Wolfsburg in January by
extending the holiday shutdown, equaling 10 days,
-4.1% or roughly 18k units in lost output.
▪ Germany: Given the Golf reduction at Wolfsburg, the
Millions
risk at Ingolstadt of slowed production of the Audi A3
increases, as it also does for the Leon and
Q1 2021 Q1 2021
Prior Forecast Potential Formentor – all on the same platform.
▪ Spain: SEAT are planning to drop from 3 shifts to 2
on the Seat Leon, Cupra Leon and Cupra Formentor
line at Martorell, effective from 25 January until April
causing an estimated 18k units in lost production.
-6.9% Much of the volume is expected to be made up by
the end of 2021.
Millions
▪ Czech Republic: Mlada Boleslav may slow
Q1 2021 Q1 2021 production of the Skoda Octavia as risks increase.
Prior Forecast Potential
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 8North America ▪ Annual 2021 output could be impacted by nearly
460k units (-2.9%). Some catchup is expected given
depleted inventory levels.
▪ Ford’s Louisville Truck plant will be down for one
week in January due to the shortage with an
-5.8% estimated loss of 6k units in the month.
▪ FCA is idling their Brampton and Toluca plants until
Millions
the end of January. Estimated loss is 20k units – but
likely helps balancing supply with demand.
Q1 2021 Q1 2021
Prior Forecast Potential
▪ Volkswagen to cut North America MQB platform
production with volumes expected to be 5%-10%
lower in Q1.
▪ GM has also reworked their 2021 planning schedule
-9.5% and Q1 volumes will be impacted (could be as much
as 10%).
Millions
▪ Output for several Honda models expected to be
Q1 2021 Q1 2021 reduced in Q1. Also, Toyota has stated that Tundra –
Prior Forecast Potential which is at a 19 days’ supply – would be impacted
as well. Source: LMC Automotive 9
© 2021 LMC Automotive Limited, All Rights Reserved.South America ▪ Annual 2021 output could be impacted by over 105k
units (-3.4%), with up to a 5% loss risk remaining in
Q2 depending on the severity of the shortage.
729
▪ All main OEMs are expected to be impacted due to
lack of chips from NXP, a large supplier of
-6.5%
semiconductors in the region.
Thousands
▪ GM is expected to cut Q1 production by upwards of
13% in Q1 – with similar cuts from other OEMs a
possibility.
Q1 2021 Q1 2021
Prior Forecast Potential
▪ Notably, albeit not related to the chip shortage, Ford
will cease production in Brazil and will end
729 production at its Camaçari, Taubaté and Troller
plants in 2021. According to Ford, the COVID-19
-9.8% pandemic amplifies persistent industry idle capacity
and slow sales that have caused years of significant
Thousands
losses in the country. This is a loss of about 160k in
Brazil for Ford. Some of this lost volume will be
made up with vehicles sourced from Mexico,
Q1 2021 Q1 2021 Argentina and India or China.
Prior Forecast Potential
© 2021 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 10For experts
by experts
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