A second decline in global automobile construction ahead?

As reported by MEPS International Ltd., the global automotive industry is showing promising signs of recovery after a standstill due to the coronavirus pandemic. Looking at the other side of the coin, the sector is facing a worldwide slowdown caused by a huge shortage in semiconductor supply and a rise in steel coil products’ prices.

Let’s have a look at the positive signs first. In the US, a variety of factors, such as the arrival of stimulus checks, record-low interest rates, and vaccination rollouts, are boosting the economy. In Asian nations, the rising car market has been sustaining global automotive production. As far as the EU is concerned, the demand for passenger vehicles is still far from pre-pandemic levels, but European car manufacturers have been able to maintain positive figures thanks to strong export demand for their luxury lines.

Despite all this, it's not all fun and games. Semiconductor chips have become fundamental parts for the assembling of latest-generation vehicles. These extremely complex components are responsible for sophisticated areas, like infotainment systems, as well as basic features, like power steering and brakes. Of course, the more advanced a vehicle is, the more semiconductor chips it has.
Once again, the Covid-19 pandemic is challenging the semiconductor chain of value, as the abrupt surge in work-from-home practices has caused a massive demand for electronic devices—all based on microchips.

Overall, the automotive industry is boding well, but semiconductor manufacturers need to match these new levels of demand as soon as possible. Otherwise, the entire sector could face another downswing.