BMW Says Chip Shortage, Raw Material Prices to Hit Second Half

BMW Says Chip Shortage, Raw Material Prices to Hit Second Half

Automotive Weekly

BMW Says Chip Shortage, Raw Material Prices to Hit Second Half


BMW raised its 2021 profit forecast on Tuesday after strong quarterly results, but said the global semiconductor chip shortage and rising raw materials prices would hurt its performance in the second half of the year. BMW has been less affected by the chip shortage than some of its peers which has been attributed to its strong relations with its suppliers.

Source: Reuters


'I know we're wasting money on incentives,' says CEO Jim Farley, acknowledging the way people buy cars and trucks is changing.

Ordering the exact vehicle—color, trim level, accessories, everything—that you want is how many Europeans have been buying their cars for ages. But the U.S. has been more committed to the model where shoppers go to the dealership and then drive home in one of the cars off the lot. The pandemic has changed how Americans interact with their local dealership. People are now choosing to do more communication online, and they're expressing less insistence on going out to take a test drive.

Ford noticed, and now the company wants to shift more future buyers to the vehicle ordering process, Ford CEO Jim Farley said on a conference call this week with reporters to discuss the company's second-quarter results. Getting more buyers to order a specific vehicle online can also help Ford's bottom line. "We are really committed to going to an order-based system and keeping inventories at 50 to 60 days' supply," he said. "I know we are wasting money on incentives."

It's not just the direct impact of COVID that has caused the shift in customer behavior. The chip shortage that has been affecting dealership vehicle supply since earlier this year is another big reason Ford thinks it can do better when more customers order their vehicles. The chip shortage has forced people to wait for the vehicle they wanted, since low inventory meant a wide range of choices were not always available on the lot to drive home.

Ford recently introduced Ford Express Buy, an online-only way to purchase a Ford vehicle in the U.S. For now, the only model you can purchase this way is the Mustang Mach-E, but Ford's president of the Americas and International Markets Group, Kumar Galhotra, told Automotive News last month that the system will expand to other models at some point.

"It's a really exciting way for us to sell vehicles in partnership with our dealers," Galhotra said. "You can start building your vehicle, pricing it, put it in the cart, and you can go all the way to make a transaction. Ford Credit can approve the customer's credit in seconds, and you can make the payment and the dealer can deliver the car to your home."

Using Ford Express Buy is optional for Ford dealers. Ford also has Ford Blue Advantage to sell certified used Ford vehicles online and, in Mexico, there's the Ford Digital Store, which lets people buy a new vehicle 100 percent online.

Source: Car and Driver


The average manufacturer-sponsored incentive is less than half what it was a year ago, and the lowest on record for the month of July, according to J.D. Power and LMC Automotive. That makes the average incentive a predicted $2,065 for the month, based on data from the first part of July, down from $4,235 a year ago, the research and consulting firms said. As a percent of suggested retail price, July incentives were on a 4.8% pace for the month, also a first, if incentives for the entire month fall below 5% of suggested retail.

Source: Forbes


New cars will be required to have technology to detect drunk drivers and a system to keep children from being accidentally left in vehicles on hot days under a series of long-sought safety measures included in the infrastructure bill awaiting a vote in the U.S. Senate. Other provisions included in the 2,702-page bill are a mandate for automatic emergency braking and crash avoidance systems for new cars, and rear guards for semitrailer trucks to keep the passenger compartments of cars from being crushed in rear-impact collisions.

Source: Bloomberg


Toyota, Honda Beat Profit Estimates But Warn of Extended Chip Crunch

Toyota Motor Corp posted record quarterly earnings and Honda Motor Co raised its annual profit forecast on Wednesday as post-lockdown sales surge, but the pair joined other automakers in warning that the global chip shortage would persist. A resurgence in COVID-19 cases has disrupted parts supplies and production at car companies, compounding a months-long pandemic-fueled chip crunch. The two Japanese car makers are facing production problems in China, which on Wednesday reported the most new locally transmitted COVID-19 cases since January.

Source: Reuters 

Auto Makers Warn Chip Shortage Will Continue to Impact Vehicle Production

The global computer-chip shortage continues to trip up the world’s largest car makers with some executives predicting it could weigh on operations well into the second half of this year. Stellantis, the maker of Jeep, Ram and Chrysler, reported strong first-half earnings on Tuesday and raised its profitability goal for the year, boosted by a rise in demand and pricing. But the world’s third-largest car company by sales also warned that increases in raw-materials prices are likely to get worse in the second half of the year and the semiconductor shortage would continue to hit production.

Source: The Wall Street Journal

GM Closes Plants…Again

General Motors Co on Tuesday said its three North American full-size pickup truck assembly plants would be shut down next week due to the global semiconductor chip shortage. The idling of the plants in Flint, Michigan; Fort Wayne, Indiana; and Silao, Mexico, comes a week after the plants resumed production following an earlier shutdown related to the chip shortage. "The global semiconductor shortage remains complex and very fluid," GM said in a statement. "The recent scheduling adjustments have been driven by temporary parts shortages caused by semiconductor supply constraints from international markets experiencing COVID-19-related restrictions."

Source: Reuters


Indiana will test wireless EV charging equipment embedded in highway pavement, allowing vehicles to charge as they drive. Testing will be done in three phases, with the first beginning this summer, according to an Indiana Department of Transportation (INDOT) press release (via The Drive).

The first two phases will involve pavement testing, analysis, and optimization, which will be done in concert with Purdue University, INDOT said. Only in phase three will an actual testbed, consisting of a quarter-mile of pavement at an undetermined location, be constructed. For the test, INDOT will use a modular setup developed by German startup Magment GmbH. Coils embedded in the concrete transmit electricity, which is picked up by coils mounted on a vehicle, according to Magment's website. Testing will involve charging heavy-duty trucks, potentially at 200 kilowatts or above, INDOT said. If the tests prove successful, the agency said it will use wireless charging on a yet-to-be-determined stretch of Interstate highway.

INDOT describes its planned wireless-charging tests as a world first, but similar technology has already been demonstrated a handful of times. In 2017, Qualcomm showed off hardware that charged a small van as it traveled at 60 mph. That technology was part of a 2019 deal selling Qualcomm's wireless-charging tech to WiTricity.

Israeli startup Electreon has a wireless-charging system that's been demonstrated with heavy-duty trucks on a short section of Swedish road. Earlier this year, Electreon also began testing the system on a bus route in Tel Aviv.

A project in Oslo, Norway, announced in 2020 will see 25 Jaguar I-Pace taxis charged by six static wireless pads from wireless-charging firm Momentum Dynamics.

While static setups such as that hold much promise for the future and can now rival the DC fast-charging rates, dynamic wireless charging still faces many technical hurdles, including a lack of standardization. Standards for static wireless charging have been harmonized to ensure interoperability of vehicles and charging hardware—but that hasn't happened with dynamic charging yet.

Source: Green Car Reports


It was only a few months ago that South Korean EV battery manufacturer SK Innovation was mired in a legal battle with its rival, LG Chem, one that threatened the company’s plans to finish its new production facility in Georgia. The two managed to reach a settlement at the last minute, paving the way for the 2022 Ford F-150 Lightning battery maker to continue its rapid expansion, which recently included a production joint venture with Ford dubbed BlueOvalSK. Last month, Ford Authority reported that SK Innovation was also mulling the idea of increasing its production and spinning off its battery division as a way to raise additional funds for expansion, and now, it’s making good on those plans.

SK will indeed spin-off its battery business amid rising demand for electric vehicles, according to a new report from Bloomberg. The company will form a new standalone business dubbed SK Battery this coming October, if the plan is approved by shareholders when a vote is taken on September 16th. Spinning off its battery business will make it easier for SK to raise funds for its planned production expansion as it aims to increase output from its current rate of 40GWh to 200 GWh by 2025 and 500 GWh by 2030.

“The decision to split the businesses is to set up a management system that will help to strengthen their competitiveness,” SK said in a statement. “They will be able to better respond to the business environment to make timely investment decisions.”

In addition to spinning off its battery production business, SK Innovation also announced that it plans to create a new entity to house its oil exploration and production operations, which will become wholly-owned subsidiaries.

In the meantime, Ford is investing heavily in electric vehicles as it aims to produce its own EV batteries and IonBoost power systems in-house in the coming years, and recently announced the creation of a battery research and development center called Ford Ion Park.

Source: Ford Authority

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