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How Car Shortages Are Putting The Global Economy At Risk

The automotive industry is a driving force of the global economy. With disturbance in its flow, companies and communities relying on manufacturers for employment are getting concerned.

For every vehicle or truck that doesn’t leave an assembly line located in Detroit, Stuttgart, or Shanghai, there is a risk of losing jobs, a report said. These could be miners digging for ore to make steel in Finland or workers forming tires in Thailand. Even Volkswagen staff in Slovakia installing instruments in sports utility cars may get affected. Their livelihoods are in the hands of supply shortages and shipping chokeholds that are making factories cut production.

The auto industry is responsible for approximately 3 percent of the world’s economy. The percentage is higher in auto-producing countries such as Germany, Mexico, Japan, South Korea, and even states such as Michigan. The slowdown in auto production may leave scars that can take many years to heal from.

The shock waves resulting from the semiconductor crisis, which has forced nearly all car manufacturers to end shifts or even temporarily shut down assembly lines, could be powerful enough to send certain nations into recession. In Japan which is home to Toyota and Nissan, the shortage of parts caused exports to decrease by 46 percent in September, compared to a year ago. This is proof of the importance of car manufacturing in the global economy.

Carmakers have managed to squelch some injuries by increasing prices and transferring some of the cost to consumers. Ford and General Motors in late October both reported significant declines in profits and sales for the summer season; however, the companies have raised their profit estimates for the entire year.

Daimler is the company that makes Mercedes-Benz vehicles. It recently announced that its net income increased by 20 percent in the third quarter, although Daimler sold 25 percent fewer cars.

The brunt of the pain is on employees and those looking for an affordable vehicle. Automakers have been distributing limited chips to luxury and other vehicles that earn the most profits, leading to long lines for cheaper vehicles. The prices of used cars are soaring because of the scarcity of new vehicles.

High-margin profit vehicles like the Ford F-150 or Chevy Silverado pickups “are continuing to get pumped out,” said Ram Kidambi, a partner at the consulting firm Kearney who is based in Detroit. “But vehicles that have lower margins are getting impacted, and therefore the workforce there is getting impacted.”

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Hi, you might find this article from Modern Campground interesting: How Car Shortages Are Putting The Global Economy At Risk! This is the link: https://moderncampground.com/usa/how-car-shortages-are-putting-the-global-economy-at-risk/