Nissan Takes Huge Hit From Ongoing Chip Shortage

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This couldn't come at a worse time for the company.

A global shortage of semiconductor chips has stymied the technology industry, and is now having a major impact on new car production. Volkswagen have already cut back production by over 100,000 units. General Motors has been hit hard as well, with the shortage impacting the Silverado and Sierra truck lines and the Camaro sports car.

Nissan is the latest automaker to feel the sting from the supply chain shortage, as Chief Executive Makoto Uchida told CNBC. "The impact we foresee as of speaking is about 500,000 units in terms of the production this year." In addition to the lack of semiconductor chips, Nissan must deal with skyrocketing raw material prices.

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To illustrate how deep an impact 500,000 units will make, Nissan only sold 285,553 vehicles in the US for the first quarter of 2021. During a down year in 2020, Nissan moved 819,715 vehicles (compared to 1,227,973 the previous year). Nissan's sales were improving in 2021, but keeping up that pace will be difficult in the current climate. This chip shortage will effectively erase production equivalent to nearly (or possibly more than) half of Nissan's annual US sales.

During an interview with CNBC's "Squawk Box Europe," Uchida said that Nissan would attempt to get production back on track. The global shortage could not come at a worse time for the Japanese automaker, as it attempts to launch a slew of new products in the US. The 2022 Nissan Pathfinder just began production at the Smyrna Vehicle Assembly Plant in Tennessee, and the all-new Frontier pickup truck will enter production later this year.

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We expect the shortage to have a dramatic affect on most automakers' Q2 sales figures for 2021. Nissan and other companies will likely show a sales dip compared to the early part of this year when sales were booming following the easing of Covid-19 restrictions. Some experts believe this shortage could last into 2022 or even 2023, so the auto industry will need to adjust accordingly. Due to the shortage impacting new vehicle production, used car values are at an all-time high.

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Source Credits: CNBC

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