Logic: As chips become available - auto production increaseAs I walk past auto dealer lots I keep an eye on the empty spaces.
As the micro chips become available, production will ramp up. This spells some good quarters for LNR as we come out of this incredible bottleneck in production.
Back in April 29 Car and Driver was reporting this:
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Here Are Car Models That Are Being Affected by the Chip Shortage (caranddriver.com) The semiconductor chip shortage has affected the auto industry in dramatic ways. Obviously, the biggest issue is how many plants are pausing production—and we’re here to let you know which major vehicles have their production currently affected by the chip shortage—but let’s not forget the Peugeot 308. Sure, it’s not available in the U.S., but Stellantis said this week that instead of the digital speedometers the car was going to have, it will now be produced with analog dials as a way to save chips to use in more popular models. Here’s hoping the upside is that these unexpected variants will be quirky collector's items some day.
Almost every automaker has been affected and forced to adjust production schedule in major ways. The consulting firm AlixPartners, cited by the Washington Post, estimated that the global auto industry will make somewhere between 1.5 million and five million fewer vehicles this year than originally expected. Volkswagen alone is down 100,000 vehicles for 2021, with the situation expected to worsen in the second quarter, and doesn't expect to be able to make up the difference this year.
Exactly how long this situation will last is up in the air, but it appears like there's darkness on the horizon. Taiwan, where many semiconductors are made, is suffering through a water shortage because no typhoons hit the island last year (which means aquifers are low) and rainfall for the first three months of 2021 was roughly half of the normal rate. Given this situation and many issues, the South China Morning Post reported this week that the chip shortage could last until 2022.