COVID-19, Inventory Shortages Continue To Plague Auto Industry, Never Mind CES

Let’s not pretend the calendar page is going to turn to the new year and suddenly things will shift thing back to normal. 

The issues plaguing the automotive industry, and other industries as well, are not showing signs of leaving any time soon. If anything, things are backsliding to life before vaccines, with many who were once-protected now at risk with lower immunity until they get around to getting those pesky booster shots. 

CES has been like an unhappy dominoes game, with major exhibitors and speakers falling out one by one. Microsoft was the last big company to nix in-person attendance, joining General Motors, Google and Waymo, Amazon and its Ring unit, Facebook parent company Meta, Twitter and Pinterest.

Many journalists are also not planning to attend. Several I know spent the weekend debating whether it’s worth the risk or not. For journalists, it’s as much about one-on-one interviews and actual facetime than the news conferences.

CES in 2020 was bad news since we didn’t know what we didn’t know. But it’s much different this year with vaccinations required (but I wish they were requiring that folks got boosters at least two weeks ago — the lack of boosters is a huge part of the problem right now) and masks required for all, even with vaccinations.  Show organizers will be passing out quick tests at registration.

As Consumer Technology Association President Gary Shapiro told Barron’s:  “I will be much more comfortable at CES with fully vaccinated people wearing masks than I am at my local grocery store where neither masks nor vaccines are required.”

That said, I don’t blame anyone who decides to err on the side of caution and stay home. I'm already wondering what's going to happen with the Chicago and New York auto shows, in February and April, respectively.

Unfortunately the problems go well beyond whether to attend a trade show.

Auto demand levels remain depressed, with consumers unable to get what they want due to the semiconductor chip shortages and chain supply disruptions, which are expected to linger until 2023, according to IHS Market. 

The research company remains cautious on recovery prospects, as the global auto industry grapples with this “perfect storm” of unprecedented circumstances. 

“The path of the pandemic remains an important driver of the 2022 auto demand cycle, especially the ‘race’ between vaccine and variants. Concerns remain as winter arrives for Northern Hemisphere nations, and the emergence of the Omicron variant represents a worrying development,” said Colin Couchman, executive director, global light vehicle forecasting, IHS Markit. 

Looking at 2022, U.S. sales volumes are expected to reach nearly 15.5 million units, up an estimated 2.6% from the projected 2021 level of approximately 15.1 million units, according to the company.

But there is hope beyond 2022.

The pace of sales is expected to quicken in the second half of 2022, says Chris Hopson, manager, North American light vehicle sales forecast, IHS Markit.

“Given current inventory conditions, it's difficult to project significant demand recovery in the first half of 2022,” Hopson says. “But we expect to exit 2022 with a pace of sales more recognizable to pre-COVID levels, setting the stage for better volume outlooks into 2023 and 2024.”

Can we hold out another two years for “normal?” It doesn't appear we have any choice. 

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