Automakers signal end of shortages after two years of runaway prices

PHOTOS: Technician doing final check of electric Volkswagen ID.  Model car 4 at the Volkswagen Group plant in Zwickau, Germany on April 26, 2022.  — REUTERS/Matthias Rietschel/File Photo

PHOTOS: Technician doing final check of electric Volkswagen ID. Model car 4 at the Volkswagen Group plant in Zwickau, Germany on April 26, 2022. — REUTERS/Matthias Rietschel/File Photo

The world’s largest carmaker is ramping up production after a three-year hiatus, raising hopes for cheaper cars and shorter waiting times for drivers.

Toyota, the world’s largest automaker, plans to surpass pre-pandemic production levels this year, the company said on Monday.

Meanwhile, its closest rival Volkswagen said it expects a return to growth in China, the world’s largest auto market and a major source of critical parts.

Automakers have struggled with shortages, especially of computer chips, since the early days of the pandemic, causing disruptions in production.

For two years, manufacturers have complained about a shortage of semiconductor supplies as consumers working from home invest in new gadgets and laptops.

Since the demand for new cars did not decrease, the prices of cars rose sharply, and buyers had to wait up to a year for delivery.

Now demand is weakening as the global economy slows down. Chips are also easier to get as tech companies adapt manufacturing to the new economic realities.

“We are currently working towards a production ceiling of 10.6 million units by 2023,” Toyota said in a statement, compared to the 9.1 million vehicles it produced in 2019. up to 9.54m if chip shortage returns.

Volkswagen said China’s auto market will grow 4-5% this year, reaching 23 million sales. The Chinese electric vehicle market is growing “incredibly fast,” said Ralf Brandstetter, head of the automaker’s China division.

A more favorable forecast raises the possibility that waiting times may shorten and prices may fall.

Last week, Tesla slashed the price of its cars to £8,000, the biggest cut in the UK. The move lowered the premium brand’s prices to levels more common with entry-level competitors. The Model 3 now costs less than rivals like the Kia EV6 and Polestar 2, while the Model Y is now just £2,000 more than the cheapest Skoda Enyaq 8.

Separately, on Wednesday, shares in Apple supplier IQE fell by a fifth after the Welsh semiconductor company warned that demand for microchips could fall sharply this year.

A London-based company that makes silicon “wafers” used in electronic chips for smartphones, cars and mobile networks said it expects customers to start “drawing stocks” amid an oversupply of chips. IQE technology is expected to eventually be used in products including Apple’s iPhone, among others.

IQE expects its customers to try to use their existing inventory and mark down their future order. He added that there is uncertainty about future demand.

Shares of IQE, headquartered in Cardiff, fell 22% on London’s junior AIM index.

John Karidis, analyst at Numis, said: “The financial environment the world is in right now is causing inventory drawdowns and all the big and big players we monitor expect this to continue.”

Tech giants including South Korean company Samsung have warned of falling demand for semiconductors. Samsung’s profit fell 69% in the last three months of last year.

Last week, CC Wei, chief executive of Taiwanese chip giant TSMC, told analysts that the shortage of the past few years has finally eased.

“We expect the deficit to be quickly eliminated,” he said.

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