Select Page

Microchip shortage: More car production cuts in 2023 – Automotive News

by Nov 1, 2022Blog0 comments

Automakers are already beginning to alter production plans for 2023 because of the microchip shortage as the industry braces for millions more lost vehicles next year.
Stellantis, for example, has begun to taper back planned production of the Jeep Cherokee in 2023 because of the semiconductor shortage, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.
A spokesman for Stellantis declined to comment on future production plans.
The automotive industry can expect to lose between 2 million and 3 million units of planned production in 2023, on top of the 10.5 million lost in 2021 and the 3.6 million lost so far this year, Fiorani said.
“Slowly, more chips are being filtered into the auto industry,” he said. “But when we see production of high-margin vehicles still being affected, we know that the answers still aren’t here — and we’re still seeing that.”
Chipmakers are pouring billions of dollars into new semiconductor production worldwide, but it will take time for all that capacity to come online. In the meantime, lead times for semiconductors “remain stubbornly high,” at about three times more than what was normal in 2019, because of high demand, said Phil Amsrud, senior principal analyst for the automotive semiconductor research area at S&P Global Mobility.
“It’s less about what the absolute number is at this point and more about how the numbers today compare to how they were before we got into this,” Amsrud said. “When lead times get back to more normal levels for a sustained period of time, I’ll feel more comfortable saying the situation has resolved itself or is in the process of resolving itself.”
At the beginning of the year, many in the industry had hoped that the microchip crisis would resolve itself toward the end of this year or into the start of 2023. But that optimism has slowly faded in the months since long semiconductor lead times persist and production cuts continued, Amsrud said.
Even three months ago, automaker and supplier executives were about evenly split in interviews with the press and in financial disclosures between those who were optimistic the crisis would ease in 2023 and those who thought it would persist, Amsrud said. Today, many more are in the pessimistic camp.
“What we don’t know at this point is, are OEMs trying to lower their expectations to the market, or do they genuinely see that they still have issues? I’m not sure what the answer is, but I see nothing to indicate that clouds are going to part in January 2023,” he said.
Capacity at semiconductor fabrication plants that make chips favored by the auto industry is expected to rise about 20 percent next year, said Dan Hearsch, managing director at AlixPartners. However, since automakers will look to meet pent-up demand from the last two years and because the number of microchips per vehicle is rising, that doesn’t mean the industry will be “flush with chips” and be able to make all the vehicles they want, he said.
“We still expect constraints next year on automakers being able to make all of the systems and accessories and heated seats and everything else that are increasing the number of devices that go into the car,” he said.
The microchip outlook could change in part because of a potential recession in 2023, which is “the darkest shadow on the future,” Fiorani said.
Automakers have generally allocated more semiconductors to higher-margin, more-expensive vehicles at the expense of lower-cost models, sending the average transaction price of new vehicles soaring over the last two years. If the economy were to enter a recession, automakers might have to rethink that strategy, Fiorani said.
The industry’s current approach “is taking a bunch of buyers out of the loop,” he said. “Having vehicles under $30,000 available would bring a lot of models back in and potentially stir the industry and the economy.”
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.
Please enter a valid email address.
Please enter your email address.
Please verify captcha.
Please select at least one newsletter to subscribe.
See more newsletter options at

You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.
Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.
Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.
Our mission
The Automotive News mission is to be the primary source of industry news, data and understanding for the industry’s decision-makers interested in North America.
1155 Gratiot Avenue
Detroit, Michigan
(877) 812-1584
Email us
Automotive News
ISSN 0005-1551 (print)
ISSN 1557-7686 (online)
Fixed Ops Journal
ISSN 2576-1064 (print)
ISSN 2576-1072 (online)