Amid a Global Semiconductor Shortage
Stellantis announced on Aug. 3 that it posted an operating profit of 8,622 million euros in the first half of this year, 45 percent higher than the average of the latest market estimates. That day, BMW announced that it recorded an operating profit of 5,005 million euros in the second quarter of this year, whereas it had been in the red in the second quarter of last year.
Likewise, Ford’s and Volkswagen’s operating profits increased from less than zero to US$1.1 billion and 6,546 million euros, respectively. Nissan increased its operating profit to 75.68 billion yen in the second quarter, when Tesla showed a higher-than-expected profit of US$1.14 billion. Hyundai Motor’s Q2 operating profit is 1,886 billion won, the highest level in seven years. Kia’s operating profit reach an all-time high of 1,487.2 billion won in the second quarter.
In that quarter, global automakers had to face disasters. Renesas Electronics’ facilities caught fire and a global chip shortage broke out. It affected Ford by impeding the production of 700,000 cars and Hyundai Motor Group had to halt for 20 days in that quarter. According to market research firms, the shortage led to a production cut of 5.76 million cars from January to July this year, which is equivalent to 9 percent of the global car sales for 2020.
Paradoxically, however, the shortage boosted the automakers’ profits. This is because the prices of their products surged as a result of explosive demand and undersupply. According to Kelley Blue Book, the average price of new cars reached a record high of US$42,258 in June this year, up 6.36 percent from a year ago. The average selling price of Hyundai and Kia cars in the United States rose 9.3 percent year on year to US$31,793 and those of Ford, Nissan and Volkswagen rose 9.6 percent, 1.7 percent and 9.2 percent, respectively.
The manufacturers slashed their agency incentives and this led to the improvement as well. Another reason is consumers’ increasing preference for relatively more expensive cars such as SUVs. The manufacturers are currently concentrating their limited chips on such vehicles.