We Might Not Be Done With The Chip Shortage Yet

While there’s light at the end of the tunnel, chip shortages could continue until the end of 2023.

byNico DeMattia|
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Chip shortages have crushed the automotive industry for the past couple of years. The Coronavirus pandemic and the war in Ukraine have made the raw materials for microchips scarce. Which has made sourcing automotive microchips incredibly difficult, thus forcing automakers to drastically cut back on production. While the shortage has eased up over the past few months, it still isn't over yet.

According to Automotive News, Honda expects a 250,000-unit drop in sales for this fiscal year, which ends March 31, dropping its projected sales figure to be 3.85 million cars. While Honda does expect the chip shortage to improve, it doesn't project that to happen until the second half of its next fiscal year, which would be October 2023 to March 2024. “We are starting to see the situation bottom out," said Honda operating executive Eiji Fujimura during a quarterly earnings announcement on Friday.

In North America, Honda is expecting a 25,000 car drop from its original 1.25 million vehicle sales projection by March 31. Asia is where Honda expects the biggest drop off, of 220,000 cars, due to the current pandemic in China. However, North American models tend to be larger vehicles with more chips, so it's typically the market hurt most by chip shortages.

Honda isn't the only one expecting continued chip shortage woes for the near future, though. According to Reuters, Ford Chief Financial Officer John Lawler recently said that the chip shortage is still an issue for the automotive industry. "I know there's been a lot of discussion about 'Well, the chip supply issue is over,' but on the larger, older nodes that are primarily the chips we use in the auto industry there is still capacity constraints."

There seems to be light at the end of the tunnel but we aren't there just yet. Chip shortages will likely continue to be an issue for automakers until the final quarter of 2023.

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