Global computer chip storage to ‘cost car makers almost £80bn this year’

The global shortage of semiconductors, which led to Jaguar Land Rover to temporarily close plants in the North West and West Midlands, will cost car makers almost £80bn in lost revenue this year, a report has said.

Global consulting firm AlixPartners said its estimate had almost doubled since its last study at the start of the year.

The firm is now forecasting worldwide production of 3.9m vehicles will be lost this year.

Car companies across the world, including some in the UK, have been hit by the shortage.

In April JLR announced that it was to temporarily shut down production at two of its main UK factories over a shortage of computer chips.

The automotive giant said it would have a “limited period of non-production” at plants in Castle Bromwich in the West Midlands and Halewood in Merseyside starting on Monday, April 26.

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The Jaguar XE and XF executive cars and the F-Type sportscar are built at Castle Bromwich while Halewood’s factory makes the Discovery Sport and Range Rover Evoque.

Andrew Bergbaum, managing director at AlixPartners, said: “The pandemic-induced chip crisis has been exacerbated by events that are normally just bumps in the road for the auto industry, such as a fire in a key chip-making fabrication plant, severe weather in Texas, and a drought in Taiwan.

“All these things are now major issues for the industry which, in turn, has driven home the need to build supply chain resiliency for the long term.

“There are up to 1,400 chips in a typical vehicle today, and that number is only going to increase as the industry continues its march toward electric vehicles, ever-more connected vehicles and, eventually, autonomous vehicles. So, this really is a critical issue for the industry.

“The top priority for companies right now is mitigating the short-term effects of this disruption as best they can.”

Business Live – West Midlands