We seldom think about the global supply chain and all the intricate pieces that have to fall perfectly into place to have the products we need every day at our fingertips. That is, until something goes wrong. The COVID-19 pandemic introduced many side effects into our lives, including a number of supply chain issues.
Those supply chain issues have also affected the auto industry, resulting a global shortage of semiconductor chips. These chips are used to provide cars with technology like electrification, safety features and driving assistance.
Per AlixPartners, the chip shortage resulted in an estimated loss of production of 7.7 million vehicles in 2021, costing the global auto industry $210 billion in revenue. Car manufacturers continue to shut down or cut production of their vehicles. And semiconductors aren’t as simple to make as IKEA furniture — they take 12 to 20 weeks to manufacture. Combine that with additional production and transportation time and a new chip order takes about six months to complete.
If you weren’t looking for a new car in the past few years, you may not have felt the immediate impact of the chip shortage. But this issue won’t resolve itself anytime soon. While some automakers think we’ll get back to normal later in 2022, chipmakers have less optimistic outlooks, anticipating delays and supply chain challenges through as far out as 2025.
It’s clear the auto industry is feeling the pain of the chip shortage, but will that trickle down to your auto insurance?