Business

Five ways 2021 could change the auto industry forever

The ‘2021’ numbers were towed to Times Square last December in a Kia Sorento SUV after a cross-country ride that began at the automaker’s US headquarters in Irvine, California and traveled more than 5,500 miles, with stops in 15 states.

Kia

DETROIT – The auto industry may never be the same after 2021, an infamous year that brought huge changes fueled by supply chain problems and the coronavirus pandemic.

Supply chain problems – most notably a global shortage of semiconductor chips – have led to historically low vehicle inventories, but also led to record prices and profits amid sustained consumer demand and a shortage of affordable cars and trucks.

This is a situation in which some auto executives, such as Ford Motor CEO Jim Farley, have pledged to continue when the industry is not in crisis due to higher margins for the automaker as well as its dealers.

“This is the best way to do our business,” Farley told investors earlier this year. “I think we have the most sophisticated go-to-market system on planet Earth. We could simplify all of this with tighter inventories. ”

Instead of a 75-day or more delivery of vehicles, Ford plans to deliver a 50-day delivery. To deal with this, Farley wants to move the company to an order-based system instead of customers buying cars from dealerships. It will help reduce the automaker’s discounts and allow Ford to better manage its production, he said.

Lower vehicle inventory levels and higher prices this year are some of the few changes that auto executives and analysts say will never return to pre-2021 levels. Other changes have affected electric vehicles, supply chains and new competitors. Here’s more information on these and more.

Electric cars

A Rivian R1T electric pickup truck during the company’s IPO outside the Nasdaq MarketSite in New York, Wednesday, November 10, 2021.

Bing Guan | Bloomberg | Getty Images

While electric vehicles, including plug-in hybrids, remain a niche market at around 4% of the US industry, executives and experts expect aggressive growth over the next decade.

Specifically, pickup truck electrification began with deliveries of the R1T from Rivian Automotive in September and the GMC Hummer EV earlier this month. It is expected to be followed in the spring by an electric version of the Ford F-150, America’s best-selling car for decades, and by the end of next year by the Tesla Cybertruck.

SPAC

Vehicle inventory

Dealer inventory levels across the country remain extremely low due to a shortage of semiconductor chips, leading to sporadic plant shutdowns and depletion of vehicle stocks in 2021.

Michael Wayland / CNBC

“The problem is that this is a fixed assets industry and we have a basic history of retreating and producing more because there is always the temptation to cheat, to produce another unit because of cost efficiency,” he said.

The auto industry had about 1 million new vehicles at dealerships in December, according to Cox Automotive, 1.8 million fewer new cars available for consumers to buy this year and 2.5 million fewer than in 2019. … JD Power reports that national vehicle stocks are 850,000 vehicles this month, while retail sales are typically 1.4 million.

Prices

Supply chains


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