HOUSTON (ICIS)--Despite strong demand amid the reopening of economies following coronavirus lockdowns, US auto sales will face headwinds into 2022 as inventories at dealerships are low because of the global microchip shortage and other supply chain constraints.
Patrick Manzi, chief economist for the National Automobile Dealers Association, said he sees dealership inventories remaining tight for the rest of the year, largely because of the chip shortage.
NADA said second-quarter sales totaled 17.0m units on a seasonally adjusted annual rate (SAAR), up a tick from 16.9m units in the first quarter.
However, the Q2 increase was supported by a very strong April, which saw a SAAR of 18.8m units, the fourth highest monthly total since 2000, Manzi said.
The rate of sales declined in May and June.
“I suspect that if inventory was not constrained, we could have seen an even higher level of sales,” Manzi said, describing Q2 sales figures.
The lack of inventory remains a major factor in all facets of the auto industry, Manzi said.
NADA said that as of 28 June, 4.6m vehicles have not been produced globally because of the chip shortage, with another 1.2m losses projected for the rest of the year.
In North America alone, 1.5m vehicle losses have been announced with an additional 300,000 projected for a total loss of 1.8m units, NADA said.
“Even if there is enough production to satiate current retail demand, there are still plenty of fleet customers looking for inventory whose needs will need to be met before manufacturers can begin to restock dealer lots to more normal levels closer to 3m units,” Manzi said.
The global microchip shortage arose as economies began to reopen from coronavirus lockdowns, which led to a surge in demand.
Chips are used to control the engine, antilock brakes, power steering, fuel-monitoring system and heating and air conditioning in modern vehicles.
A fire in April at a Japanese plant of chipmaker Renesas added to the shortage.
The chipmaker said on 25 June that production at the building that caught fire has returned to 100% capacity and that outgoing shipments should reach pre-fire levels around the third week of July.
US automakers continue to build vehicles without the chips and store them until the chips become available but have still had to adjust production schedules because of supply chain issues.
The automotive industry is a major consumer of petrochemicals, which contributes more than a third of the raw material costs of an average vehicle.
Polymers used in automobiles include polypropylene (PP), polyurethanes, nylon, acrylonitrile butadiene styrene (ABS), styrene acrylonitrile (SAN), polycarbonate (PC) and styrene butadiene rubber (SBR).
Focus story by Adam Yanelli
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