Global Chip Shortage Causing Automakers to Cancel Christmas Spending
The global chip shortage has been beating up on the car industry for the last year. It looks like the supply chain issues it caused are so bad that it is putting a damper on automaker’s holiday plans. December 2021 is going to look much different for automotive marketing.
Automakers are canceling Christmas marketing due to global chip shortage
Generally speaking, we start to see classic holiday-themed advertisements for new cars around this time of year. You probably remember the traditional “December to remember” commercials from Lexus in which someone is gifted a brand new car for the holidays. The new Lexus has a big red bow on top as it sits in a sparkling snowy driveway as it’s discovered by the happy recipient.
Well, according to a report from Reuters, we’re not going to see very many of those ads this year. Automakers and dealers are not likely to spend much money on holiday season advertising. The global chip shortage is the leading cause for brands being a bit more scrooge-y with their ad dollars in 2021.
“We will not be promoting the holiday season as we have been,” said VP of Cadillac Rory Harvey. “Why would you?”
Due to supply chain interruptions, inventory is much lower than usual. Hence, automakers see less value in advertising cars that they don’t have.
“Winter sales events are such an institutionalized event, that it’s hard not to do them,” said Kevin Krim, chief executive of analytic firm EDO. “But if they do their jobs really well, they could make people unhappy if the cars aren’t there. It is a December to forget for the automakers.”
Though, not all automakers are pulling back this holiday season. Lexus is planning to go forward with its annual “December to Remember” campaign.
“For us to change it dramatically, it’s too important to the brand. It’s part of our DNA,” said Lexus U.S. VP of marketing Vinay Shahani. According to Shahani, Lexus holiday marketing spending will be “in the ballpark” of recent years.
How much longer will the shortage last?
We assume that automakers and consumers alike are tired of dealing with the global chip shortage’s challenges. Though, it is unclear how soon automakers can expect relief. Some automakers are looking to manufacture chips in-house to alleviate the problem.
Others may wait it out. Tesla navigated the chip shortage by switching suppliers and reprogramming vehicle software. But that solution will not work for everyone.
Elon Musk predicted that the shortage will end in 2022. While Musk’s opinion is undoubtedly informed, it can’t be taken as a guarantee.
Will the 2022 holiday season be any better for vehicle sales?
With the new EV tax credits coming into effect soon, automakers have an incentive to solve the global chip shortage. Assuming the Biden administration’s legislation goes through, customers will flock to EVs soon. Automakers need to be ready for that wave.
The need to make money is a potent motivator for businesses big and small. If Musk’s predictions are accurate and other automakers make adjustments to their supply chain now, 2022 may start to look a lot more like Christmas.