Specialist
Senior executive at AutoForecast Solutions LLC
Agenda
- OEMs' altered factory production including expected cash burn due to shutdowns
- Crisis resolution efforts and potential workaround options for automotive OEMs
- Biden administration and potential federal mitigatory efforts
- Supply chain relationships and possible solutions for crisis aversion
- H2 2021 demand outlook – disruptions and expectations
Questions
1.
Could you give your up-to-date overview of the semiconductor shortage in the North American auto industry, touching on a couple of key trends and themes you think investors need to pay attention to?
2.
What are your thoughts on the profit warnings from Ford, General Motors and some of the other large North American OEMs [original equipment manufacturers]? Did they seem too negative or appropriate, based on your assessments?
3.
Could you expand on OEMs’ profitability or lack thereof potentially being worse than the initial warnings predicted? What is the downside case if profitability does decline even further?
4.
Could you elaborate on the production shutdowns, given what you mentioned around Ford shutting down production of the F-150? What do you think are some of the cash burn implications for the OEMs by running plants at less than 100% capacity?
5.
What’s your base assumption when you’re referring to a two-million-unit reduction? 17 million reducing to 15 million doesn’t seem horrible for the industry, but two million off of a base assumption of 15.5 million or 16 million could be problematic.
6.
Could you expand on the scenario you mentioned, where the industry could not recover from the semiconductor shortage until well into 2022? What form could the semiconductor shortage’s resolution take and what are you paying attention to here?
7.
Could you expand on the moves by the Biden administration? Do you think the administration could increase its crisis resolution efforts, or do you think it’s doing all it can?
8.
Do you have any preliminary unit volume expectations for 2022? Could it be higher than the 15.2 million you mentioned as your new expectation for 2021? Could there be any variation depending on how quickly the semiconductor crisis is resolved? What would be your worst- and best-case unit volume scenarios for 2022?
9.
Are global trading partners a factor for suppliers? Do you think suppliers would favour US OEMs over China-based OEMs, given the current situation?
10.
What are the risks associated with focusing on production of high-profit models such as SUVs and pickup trucks?
11.
Is there any risk that the semiconductor shortage could damage or delay the roll-out of important new models for the OEMs if it were to persist into 2022? Ford showed off the new electric F-150 Lightning last night.
12.
Could you elaborate on permanent and non-permanent unit decline? What do you define as a non permanent decline and how do you assess that?
13.
Do you think any significant supply changes coming out of this crisis could play out longer term for OEMs, perhaps in 2022? You mentioned a lot of the outsourcing that has been done already.
14.
You mentioned just-in-time shipping as a historically common supply chain practice for US OEMs. Could that change due to this crisis, even for components such as semiconductors? Do you think that will remain a practice?
15.
How would you grade or assess the management teams at the big three North American OEMs or some of the foreign OEMs? How do you think they have handled this crisis?
16.
The advent of electric and eventually autonomous vehicles, whether level 2, level 3 or eventually level 4 or level 5, will lead to more complex semiconductors and computer systems in vehicles. How do you think OEMs assess that reality, coming out of this crisis?
17.
What’s your absolute worst-case scenario for the crisis resolution efforts? Could this shortage persist into H2 2022, or would it be more likely to be resolved halfway through 2022?
18.
Would you expect any M&A scenarios resulting from the semiconductor shortage? Do you think OEMs could more vertically integrate and purchase semiconductor companies or in-house more capacity through M&A transactions?
19.
How could OEMs limit the amount of cash they’re burning while in production shutdown and not running at full capacity? Would that be impossible given the auto industry environment? Would OEMs cutting back CAPEX on electrification be problematic?
20.
What are your expectations for the next 3-6 months? What do you think are likely scenarios for the North American auto industry?
21.
Do you have any closing comments? Is there anything else you wanted to touch on or highlight around the semiconductor shortage or the North American auto industry’s broader state?
