Frying Pan Into the Fire -- Chip Shortage

Weather Man

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According to The Detroit News, production at the Windsor Assembly Plant (WAP) will resume after a lengthy period of downtime due to the global semiconductor shortage. The plant manufacturers the award-winning Chrysler Pacifica and Chrysler Voyager (also known as the Grand Caravan in Canada) minivans. The WAP plant is expected to continue with two shifts starting on Monday, July 5th.

2021-Chrysler-Pacifica-at-Windsor-1-scaled.jpg

2021 Chrysler Pacifica Limited AWD rolling off the Windsor Assembly Plant line. (Chrysler).
AutoForecast Solutions LLC has said that the WAP plant has lost production of nearly 65,450 units as of earlier this week. The WAP facility was shut down for three weeks during the month of February, and almost completely since the month of April.

2021-Chrysler-Grand-Caravan-SXT.-Chrysler-Canada-16-scaled.jpg

2021 Chrysler Grand Caravan SXT in front of the Windsor Assembly Plant. (Chrysler Canada).

But while the return to work is good for the 4,581 WAP employees, Stellantis has announced that it will idle two more plants the week after next, to help conserve its semiconductor chips for its more popular offerings. The Belvidere Assembly Plant (BAP) in Illinois and the Toluca Assembly Plant (TAP) are those that will be idled. The BAP plant has been struggling and continues to be the most underutilized plant in North America, producing the slow-selling Jeep® Cherokee as its only vehicle.

fachada7qhsefim21ohf8b3kopd4lbit5.jpg

Stellantis Toluca Assembly Plant. (Stellantis).
The TAP plant recently ended production of the stong-selling but aged Dodge Journey crossover and the North American-spec Fiat 500, it currently manufactures all of the Jeep Compass models for North America. The plant is scheduled to begin production of the 2022 Jeep Compass later this year.

belvidere_2017_9vfqg4hac53ositiitm1df83f31-scaled.jpg

Jeep® Cherokee Production At The Belvidere Assembly Plant. (Jeep).

AutoForecast Solutions has said that the BAP plant has been the hardest plant affected globally by the major automakers with a loss of more than 118,480 units due to the shortage. The TAP plant, according to the automotive forecaster had a loss of more than 64,200 units.

It is expected that the second quarter, will be the worse hit from the semiconductor shortage for Stellantis.
 

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Weather Man

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@13COBRA earning his pay, finding inventory can't be easy, keep going Nick!


Ford extends U.S. production cuts as expected due to chip shortage
  • Ford Motor (F -0.6%) updates on its production plans as the global chip shortage extends as anticipated.
  • The automaker will idle or reduce production at eight plants in July, including six in the U.S. for varying periods of time. Some of the production halts will extend into early August. In addition, Ford says production of the Ford Ranger and new Ford Bronco will be down between July 5 and July 26 due to an unrelated part shortage.
  • The development was largely anticipated after Ford already guided for Q2 production to be down sharply.
  • The chip shortage issue and production headaches haven't knocked investor enthusiasm over Ford's electrification plans off track. Shares of Ford are up 71% YTD.
 

L8APEX

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My brother in law ordered a '21 F-150 Lariat back in March, original blend date was April 20, actually ended up being 6-21. It's finally finished and awaiting transport. Could be another 20+ days as the truck driver shortage is hitting them too, even though it just has to go from KC to Colorado Springs. My mustang was less than 10 days from Flat Rock to Wichita, oddly My mother's mustang was 2 cars ahead of mine. (Her vin ended in 19, mine 21) and it showed up 2 days after mine.

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Weather Man

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Ford is considering a new plan to alleviate the buildup of unfinished vehicles sitting in lots across the country as a result of the global semiconductor chip shortage. According to Automotive News, Ford is currently debating a proposal to ship vehicles that are still missing the chips to dealerships, shifting the onus for installing the chips—once supplies are replenished—onto the dealers. Ford has been manufacturing vehicles without the semiconductors and storing them in lots in several states, only sending them to dealerships once fresh stock arrived. However, the lots are filling up and Ford needs to make room so it can keep its factories running.
Unfinished vehicles would only be sent to dealerships that opt into the plan, and service technicians at these locations would receive training for installing the chips, AN reported. The plan would also involve compensating dealers for just under an hour’s worth of labor per vehicle. It is not known whether the dealers would be accountable for the vehicles while they are parked in their lots awaiting the parts, or whether they would still be Ford’s responsibility.

Automotive News said it spoke to four people with knowledge of the plan who wished to remain anonymous. The publication also talked to dealerships, with some expressing apprehension over taking on the responsibility, and possible liability, of the unfinished cars, while others approved of the idea since the vehicles will help fill their barren lots.

In a statement to Car and Driver, a Ford spokesperson called the reports premature and said, “We are exploring a number of different options as we work to get our customers and dealers their new vehicles as quickly as possible.”
 

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Ford is considering a new plan to alleviate the buildup of unfinished vehicles sitting in lots across the country as a result of the global semiconductor chip shortage. According to Automotive News, Ford is currently debating a proposal to ship vehicles that are still missing the chips to dealerships, shifting the onus for installing the chips—once supplies are replenished—onto the dealers. Ford has been manufacturing vehicles without the semiconductors and storing them in lots in several states, only sending them to dealerships once fresh stock arrived. However, the lots are filling up and Ford needs to make room so it can keep its factories running.
Unfinished vehicles would only be sent to dealerships that opt into the plan, and service technicians at these locations would receive training for installing the chips, AN reported. The plan would also involve compensating dealers for just under an hour’s worth of labor per vehicle. It is not known whether the dealers would be accountable for the vehicles while they are parked in their lots awaiting the parts, or whether they would still be Ford’s responsibility.

Automotive News said it spoke to four people with knowledge of the plan who wished to remain anonymous. The publication also talked to dealerships, with some expressing apprehension over taking on the responsibility, and possible liability, of the unfinished cars, while others approved of the idea since the vehicles will help fill their barren lots.

In a statement to Car and Driver, a Ford spokesperson called the reports premature and said, “We are exploring a number of different options as we work to get our customers and dealers their new vehicles as quickly as possible.”

Im guessing the idea is to fill lots. Since the vehicle is not complete at the manufacturing plant will the dealership be able to make a build date tag?
 

03cobra#2

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No way any dealer would opt in to do that if they have to pay for / floor plan the vehicle. Think about it, would you pay interest on a vehicle you couldn't sell. Only way that happens iscif Ford assumes responsibility for the vehicle until the chips are installed and can be sold.


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Weather Man

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Im guessing the idea is to fill lots. Since the vehicle is not complete at the manufacturing plant will the dealership be able to make a build date tag?

I would bet the build dates have already been set on these trucks. Be pretty interesting to see how long they actually have sat for the oldest ones.
 

Weather Man

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No way any dealer would opt in to do that if they have to pay for / floor plan the vehicle. Think about it, would you pay interest on a vehicle you couldn't sell. Only way that happens iscif Ford assumes responsibility for the vehicle until the chips are installed and can be sold.


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Ford would waive interest until vehicle had chips, I would think.
 

me32

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I would bet the build dates have already been set on these trucks. Be pretty interesting to see how long they actually have sat for the oldest ones.

Legally can they do that? Considering the vehicle build is not complete.
 

13COBRA

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Ford is considering a new plan to alleviate the buildup of unfinished vehicles sitting in lots across the country as a result of the global semiconductor chip shortage. According to Automotive News, Ford is currently debating a proposal to ship vehicles that are still missing the chips to dealerships, shifting the onus for installing the chips—once supplies are replenished—onto the dealers. Ford has been manufacturing vehicles without the semiconductors and storing them in lots in several states, only sending them to dealerships once fresh stock arrived. However, the lots are filling up and Ford needs to make room so it can keep its factories running.
Unfinished vehicles would only be sent to dealerships that opt into the plan, and service technicians at these locations would receive training for installing the chips, AN reported. The plan would also involve compensating dealers for just under an hour’s worth of labor per vehicle. It is not known whether the dealers would be accountable for the vehicles while they are parked in their lots awaiting the parts, or whether they would still be Ford’s responsibility.

Automotive News said it spoke to four people with knowledge of the plan who wished to remain anonymous. The publication also talked to dealerships, with some expressing apprehension over taking on the responsibility, and possible liability, of the unfinished cars, while others approved of the idea since the vehicles will help fill their barren lots.

In a statement to Car and Driver, a Ford spokesperson called the reports premature and said, “We are exploring a number of different options as we work to get our customers and dealers their new vehicles as quickly as possible.”

It's not a bad plan...but it's not necessarily a good one either.

Having a bunch of vehicles sitting here that we can show, not sell, not drive...in an inventory shortage, will upset a lot of people. It'll further upset people that there's no ETA on when they will be sold.

Until they are fixed, Ford assumes all liability for them.

Im guessing the idea is to fill lots. Since the vehicle is not complete at the manufacturing plant will the dealership be able to make a build date tag?

I think the true unspoken idea is to save Ford millions in storage fees.

No way any dealer would opt in to do that if they have to pay for / floor plan the vehicle. Think about it, would you pay interest on a vehicle you couldn't sell. Only way that happens iscif Ford assumes responsibility for the vehicle until the chips are installed and can be sold.


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No financial responsibility until the vehicle is fixed and ready to sell.

Legally can they do that? Considering the vehicle build is not complete.

Yes, they can.
 

kazman

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Yeah, Ford wants the dealers to "store" the inventory for them to save costs associated with inventory and space leasing, I'd imagine.
 

DSG2003Mach1

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Having a bunch of vehicles sitting here that we can show, not sell, not drive...in an inventory shortage, will upset a lot of people. It'll further upset people that there's no ETA on when they will be sold.

this was my first thought
 

Weather Man

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Not a lot of good news unfortunately...this crap could really drag out.


Toyota, Honda to suspend work at Asian plants due to parts shortage
  • Toyota Motor Corp (TM -0.8%) announced today that it would be shutting down its three Thailand plants and a subsidiary's plant in Japan for at least five days due to the ongoing parts shortage.
  • Toyota has a production capacity of 550,000 vehicles a year in Thailand.
  • Competitor Honda Motor Co (HMC -0.8%) announced Wednesday that the company would also close one of their Japanese plants due to the shortage.
  • A third wave of COVID-19 outbreaks have ravaged Southeast Asia and many car component companies have had to suspend or reduce work to protect their employees.
 

Weather Man

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A little good news.


TSMC reportedly signs multiple auto chip deals amid capacity expansion
  • Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is reportedly ramping up capacity and prioritizing automotive chips after signing multiple contracts through 2022.
  • DigiTimes sources say TSMC is actively working with the auto supply chain to help alleviate the global chip shortage, which is expected to ease starting in the third quarter.
  • United Microelectronics (NYSE:UMC) and other Taiwan-based foundries are expected to follow TSMC's lead in prioritizing the fabless auto chip customers.
  • TSMC CEO C.C. Wei recently said the company's auto chip output was up about 30% year-over-year during the first half of 2021. The company remains on track to finish the year with output 60% above 2020 levels.
  • TSMC expects 28-nanometer to be the primary process technology for its auto chip manufacturing. The company plans to add 28nm lines at its factory site in Nanjing, which will have an additional 40,000 wafers installed by mid-2023.
  • The automotive chip shortage started when the pandemic spiked chip demand in areas like consumer electronics while vehicle sales dropped, leading automakers to pull back on chip orders. When the auto market had a faster than expected recovery, foundries didn't have the capacity slots available to add automakers fully back into the fold.
  • The chip shortage was further stretched by weather-related power outages at Samsung, Infineon (OTCQX:IFNNY), and NXP Semiconductors (NASDAQ:NXPI). Auto chip giant Renesas (OTCPK:RNECF) was then hit by a fire at a chip plant that put its production behind.
  • The majority of the automotive chip companies outsource at least some of their chip production to TSMC. The most notable exception is STMicroelectronics (NYSE:STM), which sticks to in-house auto chip production.
  • Earlier this week, auto chip company Texas Instruments (NASDAQ:TXN) reported upside earnings with a weak third-quarter forecast that sent semiconductor stocks lower.
  • Intel CEO Pat Gelsinger said during yesterday's earnings call that he expects the global chip shortage to continue for another year or two.
 

Weather Man

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Enough people need what Ford sells to pony up. There have still got to be a LOT of guys waiting on the sidelines for price and choice to improve.


Ford and Detroit peers rally after strong quarter, improved chip outlook
  • Ford Motor Company (F +5.2%) rallies after a strong quarter and boost to the automaker's 2021 outlook.
  • "On an operating basis, the beat this quarter was almost entirely driven by North America & Financial Services, both of which were a function of favorable market dynamics (tight inventories, elevated pricing, etc.), which was partially offset by some underperformance in Ford’s other segments," updates analyst John Murphy.
  • Beyond the Q2 results amid a tough and volatile macroeconomic backdrop, Murphy says the solid execution and performance in Ford's underlying business is enabling the company to pursue new model launches and vehicle electrification.
  • The strong quarter from Ford is helping to push General Motors (GM +3.8%) and Stellantis (STLA +3.8%) higher as well. During the earnings call, Ford execs said the chip shortage situation is improving (full earnings call transcript).
  • Ford CEO Jim Farley: "In April, we said we'd expect to lose about 50% of our planned volume in the second quarter, which then implied a loss in adjusted EBIT. In fact, we did better than expected. We leveraged the strong demand to optimize our revenue and profits. We're seeing signs of improvement in the flow of chips now in the third quarter, but the situation remains fluid, especially due to the delay in ramp up of one of our key suppliers, Renesas, that Ford is uniquely exposed to in the first half. Overall, after effectively managing through the first half, we are now spring-loaded for growth in the second half and beyond because of those red-hot products, pent-up demand, and improving chip supply."
 

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