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Another Carmaker Confirms the Struggle: The Demand Exists But Not Enough Chips

Carmakers continue to struggle with the very constrained semiconductor inventory, and while analysts expected the crisis to ease off in the second half of the year, we’re seeing more and more signals this isn’t going to happen.
Honda says its production has been hit by the lack of chips 8 photos
Photo: Honda
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Now another automaker has confirmed the impact of the chip shortage. Honda, which is one of the leading companies in the automotive market, revealed that its profit in the first fiscal quarter went down no more, no less than 33 percent, as compared to the same quarter a year ago.

The Japanese brand, therefore, reported $1.1 billion in profit, a notable decline from $1.7 billion in the April-June quarter of 2021.

In terms of vehicles, the decline means that Honda’s sales went down from close to 1 million cars in the 2021 quarter to 815,000 vehicles this year, with notable declines in all big markets, including the United States.

As for the reasons that caused this decline, Honda says it loud and clear: the very constrained chip inventory makes it impossible to keep the production up and running at the desired pace. The demand continues to be strong, but on the other hand, building enough cars for customers is pretty much impossible right now, simply because Honda doesn’t have enough chips to install on the vehicles it builds.

But as if the semiconductor crisis wasn’t enough, Honda is also struggling with other worsening factors, including the lockdowns happening in China and the rising costs of materials.

In case you’re wondering when the whole nightmare could finally come to an end, this is something that nobody seems to be able to predict accurately. On one hand, carmakers expect the last months of 2022 to bring some signs of recovery, but on the other hand, tech giants don’t believe the chip shortage could come to an end earlier than late 2023 or early 2024.
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About the author: Bogdan Popa
Bogdan Popa profile photo

Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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