The pandemic caused by Covid-19 brought several negative consequences in different markets. The automotive industry was impacted by a worldwide shortage of chips. It is a problem that is still ongoing, and a solution is expected to be found soon.
In fact, according to AutoForecast Solutions, so far in 2022, as of the end of last week, the industry has lost more than 1.2 million units of planned vehicle production globally.
Major global automakers have been affected. For instance, the American auto giant, Ford, announced last week a stop in production at its Michigan facility due to shortage problems. The same happened for its Flat Rock assembly plant, the one in charge of manufacturing the Mustang, where there is also a stoppage due to the problem of the lack of semiconductors.
Last month, Ford already announced that vehicle production volumes in the current quarter were going to decrease. Ford’s wholesale volumes for 2021 were down 6% year-on-year, and are expected to decline further in the first half of 2022. Clearly, low vehicle production amid parts shortages and manufacturing constraints will affect the company’s revenues.
However, it’s not all negative news for the company. Ford’s Turkey unit marks an important milestone with the start of production of all-electric transit vans, as announced by its Ford Otosan joint venture in Turkey.
Ford Otosan is a joint venture between Ford and Koc Holding. They have earmarked an investment of 2 billion euros to expand the capacity of the Ford Otosan factory. “Production of E-Transit in our Kocaeli plant, where the electricity is supplied with 100% renewable energy, is a source of pride for us and another turning point in our increasing role in Ford’s electrification strategy,” said Ford Otosan CEO Güven Özyurt.
According to Ford, the E-Transit van has been the world’s best-selling cargo van, and more than 5,000 orders have been received, even before the vehicles rolled off the assembly line. The company expects this van to give it an edge over its competitors, as competition in the European electric vehicle market looks very strong going forward.
For Bank of America Securities analyst John Murphy, Ford’s price target rose from $30 to $32. He based this change on the argument that despite low sales volumes, Ford’s profitability per unit is high. Profits are expected to rise in 2022 compared to the previous year.
Would you invest in Ford’s stock? Do you think its success in Europe with the E-Transit van will help the company’s upturn?
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