Things aren’t looking hot for the auto industry thanks to the semiconductor chip shortage. In fact, Mercedes-Benz, one of the world’s top car companies, is feeling the pain. It might’ve had a good start to the year, but things aren’t looking great as we enter the second half of 2021.
Where are the chips?
Just when you thought the toilet paper shortage was bad, we end up with a chip shortage. It began when the COVID-19 pandemic hit last year, and many people were forced to work remotely. Rather than using their office computers, they went out and bought laptops.
To say the tech world didn’t expect this situation would be an understatement. It caught the industry off-guard, and it was unprepared to meet the sudden demand.
The chip shortage carried over to auto manufacturers, which use semiconductors in vehicles. If things continue this way, the chip shortage could cost the auto industry $110 billion in revenue this year alone.
Chipmakers ramped up efforts to meet the unexpected demand. But they’ve seen a few setbacks, like the fire at the Renesas warehouse. It seems the bad luck keeps coming, and not even luxury automakers, including Mercedes-Benz, are immune to this shortage.
But Daimler isn’t afraid
Despite the chip shortage, Mercedes-Benz’s parent company, Daimler, believes it’s still performing well. This is largely based on strong second-quarter numbers.
“We achieved a strong performance across all divisions in the second quarter,” Daimler recently reported. “At Mercedes-Benz Cars and Vans, we posted double-digit margins for the third quarter in a row and thus demonstrated the resilience of our business — despite the persistently low availability of semiconductors.”
Daimler is also trying to increase sales by creating a truck and bus company. Given the push for more public transportation and the increasing adoration for trucks, this might help boost sales.
Though this is great news, the chip shortage isn’t going anywhere anytime soon. It calls into question whether Daimler can continue to perform well moving forward. And it’s not looking good.
A strong start for Mercedes-Benz won’t be enough to end well
Despite the sales boost Mercedes-Benz enjoyed during the second quarter, it appears the momentum can’t last. The chip shortage isn’t a problem with an easy workaround.
Bloomberg expects Daimler’s sales to begin flattening as the year continues. Without producing enough vehicles to meet consumer demand, the manufacturer will inevitably see sluggish sales, and they’re beginning to cut into Daimler’s bottom line in more ways than one. Though stocks are still high in many areas, they’re beginning to dip. It’s not enough to make a major impact on Mercedes-Benz just yet, but with a lack of new cars, that might change.
The awful news is that it doesn’t appear the semiconductor chip shortage will end anytime soon. The pandemic still affects many parts of the world, and chip production hasn’t increased enough to meet demand. As chips come out, they’re snapped up quickly, and it’s unclear who gets what.
Either way, no one automaker is getting enough chips to meet demand. Though Toyota performed well enough stateside to kick General Motors off the throne as America’s best-selling automaker, even it’s feeling the pain.
While it’s clear this can’t last forever, it won’t end soon. In the meantime, you might have to wait to buy a new Mercedes-Benz if you can’t find the one you want at dealerships.