Early optimism by European automakers and analysts alike, with claims that vehicle output would improve markedly in the second half of 2021, has long since faded as the procurement crisis persists. The most recent setback has been the forced closure of semiconductor facilities in Malaysia to contain the latest COVID-19 outbreak. The crisis hinges upon raw material price increases, semiconductor shortages and bottlenecks in the production of intermediate products.
Undeniably, the major constraint to European Light Vehicle output so far this year has been the scarcity of chips, which is estimated to account for roughly 80% of the total loss in output from our pre-crisis expectations. Meanwhile, shortages of other vehicle components, such as wiring harnesses and brake parts, have further exacerbated the slowdown, albeit to a lesser extent.