Photo: Bogdan Popa/autoevolution
Despite analysts' expectations, the lack of semiconductors keeps disrupting car production worldwide, with one more high-profile company confirming the struggle in its latest earnings reports.
Subaru, which says it managed to boost global production by as much as 22.2 percent, to 671,000 vehicles between April and December 2022, warns that the constrained chip inventory is still wreaking havoc in the automotive industry. As such, the company has no other option and prefers to play the safe card, so it is adjusting its production and sales targets for the end of the fiscal year.
The first three quarters of the fiscal year 2023 brought important increases for Subaru on nearly every front. In addition to the sale production boost, the company also managed to improve sales by as much as 16 percent, to 635,000 vehicles. Subaru says the demand in the United States and Japan remained very strong, spearheading its market performance.
I know what you’re thinking: if Subaru’s business is on the rise, how come the company can’t maintain the same trend for the remainder of the fiscal year as well?
It all comes down to chip supply challenges. The Japanese firm says it’s lowering the global production target to 880,000 units, down 90,000 units from the previous forecast, because its suppliers can't ship the chips it needs to build as many cars as it originally expected.
The same thing applies to the sales target, as it now expects shipments to drop by around 50,000 units, to eventually reach 870,000 when the fiscal year ends.
In many ways, Subaru’s forecast seems rather pessimistic, especially given the current trends in the chip market. But on the other hand, there’s no doubt the Japanese company is right, and this is precisely why.
First and foremost, with sales of key electronics, such as phones and PCs, going down, foundries are focusing more aggressively on retooling, especially as the demand in the automotive market remains strong. In other words, more chip makers are now trying to secure orders from car manufacturers, though this can’t happen overnight, especially because the retooling part takes time. History has taught us the chip shortage can't be resolved overnight, and this certainly isn't the case this time.
Second of all, all the investments in production capacity, including in key markets like the United States, wouldn’t come to fruition until 2024, at the earliest. Companies like Intel are working at full speed on new chip plants, but once again, bringing the production lines up and running takes time as well.
Eventually, Subaru is just joining a group of companies that are rather reserved as far as the end of the chip shortage goes. Toyota, too, expects the semiconductor problems to continue, so it anticipates the constrained inventory to cause a 10 percent drop in its 2023 production target.
The first three quarters of the fiscal year 2023 brought important increases for Subaru on nearly every front. In addition to the sale production boost, the company also managed to improve sales by as much as 16 percent, to 635,000 vehicles. Subaru says the demand in the United States and Japan remained very strong, spearheading its market performance.
I know what you’re thinking: if Subaru’s business is on the rise, how come the company can’t maintain the same trend for the remainder of the fiscal year as well?
It all comes down to chip supply challenges. The Japanese firm says it’s lowering the global production target to 880,000 units, down 90,000 units from the previous forecast, because its suppliers can't ship the chips it needs to build as many cars as it originally expected.
The same thing applies to the sales target, as it now expects shipments to drop by around 50,000 units, to eventually reach 870,000 when the fiscal year ends.
In many ways, Subaru’s forecast seems rather pessimistic, especially given the current trends in the chip market. But on the other hand, there’s no doubt the Japanese company is right, and this is precisely why.
First and foremost, with sales of key electronics, such as phones and PCs, going down, foundries are focusing more aggressively on retooling, especially as the demand in the automotive market remains strong. In other words, more chip makers are now trying to secure orders from car manufacturers, though this can’t happen overnight, especially because the retooling part takes time. History has taught us the chip shortage can't be resolved overnight, and this certainly isn't the case this time.
Second of all, all the investments in production capacity, including in key markets like the United States, wouldn’t come to fruition until 2024, at the earliest. Companies like Intel are working at full speed on new chip plants, but once again, bringing the production lines up and running takes time as well.
Eventually, Subaru is just joining a group of companies that are rather reserved as far as the end of the chip shortage goes. Toyota, too, expects the semiconductor problems to continue, so it anticipates the constrained inventory to cause a 10 percent drop in its 2023 production target.
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