BMW AG Plants Starting to be Affected by Global Chip Shortage

[JJ 911SC]

I think they are 'preparing us" for bad news.

Listed on the BMW.ca about the 2022 X4 Sport Seat; Numerous Manual Adjustment Options.

Really, 80K+ car and I need to Fuchen manually adjust stuff

[Wild Blue]

Originally Posted by stein_325i

BMW warns chip supply shortage 'critical', output to suffer

Well, craaaaaaaaaaaaaaap

[soheil]

Originally Posted by TAZ007

There is always aftermarket. I suggest waiting until the chip shortage stabilizes.

Yes, except I work in auto industry for one of the top tier suppliers. We are seeing lead times of 12+ months for some of the chips for our current ongoing products so I can only assume HK and other BMW suppliers are facing similar situations…

[TAZ007]

Originally Posted by soheil

Yes, except I work in auto industry for one of the top tier suppliers. We are seeing lead times of 12+ months for some of the chips for our current ongoing products so I can only assume HK and other BMW suppliers are facing similar situations…

Your assumption is correct. Currently, BMW took orders for the HK system and made cars but cannot deliver because the RAM is back ordered. They are getting a few in and fitting them in; however, they are not really telling the buyers the full extent. It's frustrating for both parties, especially when we have to come to these forums to discover the truth.

[chassis]

The chip situation plus the 2020-2021 plant shutdowns tell me not to buy a 2020 or 2021 produced vehicle in the preowned market. MB has totally failed on the V167/X167 GLE/GLS launch, and the chip situation is prolonging the agony for those models.

There could be some exceptions, however, for new platforms launched prior to 2020 and which have not so far experienced content stripping due to the chip situation. Until recently, the 9Y0 Porsche Cayenne, launched in 2019, seemed to be free of problems and content stripping. Now in 2021, however, steering column adjustment is manual until the control module is available. It will be a no charge installation, when it arrives. ETA for module arrival has not been identified yet by Porsche.

If you check 2019 preowned pricing for your favorite car model, it's up. Strongly. Selected 2020 models, for example the MB GLE, have prices below 2019 model pricing. This tells me the market sees 2020 models as inferior.

[stein_325i]

BMW’s Chip Shortage View Darkens in Contrast With Stellantis

Originally Posted by Bloomberg

BMW AG warned of uncertain months ahead as the global chip shortage worsens, staying cautious as Stellantis NV surprised with a substantial lift to guidance for the year.

The luxury-car maker said semiconductors are a cloud on the horizon even as it expects to lose sales of no more than 90,000 cars in 2021, equivalent to less than 10% of first-half shipments. Stellantis raised its profitability forecast, saying it could lose production of around 1.4 million vehicles while holding out hope for improving supply toward year-end.

The contrasting commentary suggests BMW is taking a cautious stance on the risks it faces. Investors “will try to determine if it is simply conservatism or something more severe,” Tom Narayan, analyst at RBC Capital Markets, said in an emailed note.

BMW’s earnings before interest and taxes surged to 5 billion euros ($5.9 billion) in the second quarter, beating an average analyst estimate of 4 billion euros, thanks to one-time items including the reversal of a provision for a fine. Still, BMW was downbeat about difficult months ahead.


“The longer the supply bottlenecks last, the more tense the situation is likely to become,” Chief Financial Officer Nicolas Peter said in a statement. “We expect production restrictions to continue in the second half of the year and hence a corresponding impact on sales volumes.”

BMW fell 3.9% as of 1:26 p.m. in Frankfurt, paring its gain for the year to about 13%. Stellantis rose 4.3% in Milan.

Supply Woes
BMW’s expectations mirror concerns raised by rivals. While Volkswagen AG lifted its operating returns forecast, helped by its luxury Audi and Porsche brands, the carmaker warned of worsening supply woes, and Daimler AG dialed back its delivery expectations due to the shortage. BMW has fared better than others thus far, reporting relatively minor disruptions at its factories.

A year on from the depths of the coronavirus crisis, demand for BMW’s models jumped during the second quarter. After Mercedes outsold its rival by almost 30,500 cars during the first three months of 2021, BMW narrowed the year-to-date gap to just over 4,400 cars at the end of June.

Neck and Neck
BMW pulls within 4,500 cars of Mercedes in year-to-date worldwide sales

Source: Company statements

BMW also benefited from charging higher prices and prioritizing its most lucrative models. The dynamic has helped take the sting out of rising raw material costs, though the company said those increases will drag on earnings during the remainder of the year.

Free cash flow is expected to rise to 5.8 billion euros, provided the chip crisis doesn’t worsen significantly, up from a forecast of 4 billion euros previously.

BMW’s operating return from automaking jumped to 16%, roughly double its annual forecast of 7% to 9%. The automaker in May said earnings would get a boost of about about 1 billion euros after the company cut its provision for a European Union antitrust probe. That change spurred the manufacturer to lift its automaking margin forecast by one percentage point.

What Bloomberg Intelligence Says
BMW’s strong 2Q headline result was boosted by one-time items, with an underlying adjusted 9.8% auto Ebit margin below consensus compared with Mercedes’ 2Q adjusted margin of 11% and Audi’s of 10.8%. Exceptional items included a known 1 billion-euro provision reversal, but also a new 503 million-euro 1H pension adjustment which undermined the quality of the result. Consensus was already at the top end of Ebit-margin guidance of 7-9% before the pension gain, which implies a weak 2H auto margin of about 6%.

-- Michael Dean, BI automotive analyst

[BMWCCA1]

Originally Posted by chassis

If you check 2019 preowned pricing for your favorite car model, it's up. Strongly. Selected 2020 models, for example the MB GLE, have prices below 2019 model pricing. This tells me the market sees 2020 models as inferior.

Strange correlation since the chip shortage really didn't cause problems until the 2021 model year for most manufacturers.

[stein_325i]

Mercedes, VW, BMW warn chip shortage could last until 2023

Originally Posted by Automotive News Europe

MUNICH -- The global semiconductor shortage may not entirely go away next year and could take until 2023 to be resolved. executives said at the IAA Munich auto show.

Soaring demand for semiconductors means the auto industry could struggle to source enough of them throughout next year and into 2023, though the shortage should be less severe by then, Daimler CEO Ola Kallenius said.

"Several chip suppliers have been referring to structural problems with demand," Kallenius said. "This could influence 2022 and [the situation] may be more relaxed in 2023."

BMW CEO Oliver Zipse said he expects supply chains to remain tight well into 2022. "I expect that the general tightness of the supply chains will continue in the next six to 12 months," he said.

Zipse said he saw no issues in the long-term, adding that the automotive industry was an attractive client for chipmakers.

Volkswagen Group CEO Herbert Diess said shortages will continue for the next months or even years because semiconductors are in high demand.

"The internet of things is growing and the capacity ramp-up will take time. It will be probably a bottleneck for the next months and years to come," he said.

VW purchasing chief Murat Aksel said semiconductor supply remains very volatile and tight in the third quarter. "We hope for a gradual recovery by the end of the year," he said..

The auto industry worldwide would need roughly 10 percent more production capacity for chips, Aksel said.

Renault CEO Luca de Meo said the situation regarding the shortage was tougher than expected during the current quarter.

He said the next quarter should bring some improvement despite a poor visibility.

Renault was sticking to its previous forecast for a cut to production of 200,000 cars in 2021 due to the shortage, de Meo said.

Automakers, forced by the COVID-19 pandemic to shut down plants last year, face stiff competition from the sprawling consumer electronics industry for chip deliveries, which have been upended by a series of supply chain disruptions.

Cars have become increasingly dependent on chips -- for everything from computer management of engines for better fuel economy to advanced driver assistance features such as emergency braking.

Daimler recently cut its annual sales forecast for its car division, projecting deliveries will be roughly in line with 2020, rather than up significantly.

Daimler's Mercedes-Benz brand has been hit this quarter by factory shutdowns in Malaysia, which in recent years emerged as a major center for chip testing and packaging.

Infineon Technologies, NXP Semiconductors and STMicroelectronics are among the key suppliers operating plants in the country.

Kallenius said Daimler hopes its own supply of semiconductors will improve in the fourth quarter.

Bloomberg and Reuters contributed to this report

[LogicalApex]

I am out until at least 2026. As I think it will be rough for a while yet.

First, you have the component shortages upending the market and leading to widespread and seemingly random decontenting. Like the 5 Series loosing the surround view cameras and Digital Key features BMW heavily advertised last year. As it stretches on to being 3 years as it is looking like you’ll see the industry designing around them missing for a while. Once supply starts to normalize all of this will need to move back into place.

Meanwhile the shortages will inflate car prices for the foreseeable future. Do you are paying more for less.

I see it much like a rubber band and it will take a while to fully go back to its normal relaxed state.

[TAZ007]

Basically, new cars will have less options for the next 2 model years.

[stein_325i]

Europe's Automakers Warn 2022 Production will Fall Short of Demand

Originally Posted by Automotive News Europe

Europe's automakers and consumers should brace for another year of supply-chain snarls crimping vehicle output.

Industry association ACEA expects the global chip shortage to stretch into 2022, probably causing members to miss their own production forecasts, according to a document seen by Bloomberg News.

"Car production volumes in Europe will likely be substantially lower than expected this year and next," the group said in an annex to a letter it sent to the European Commission. "Supply will not be in line with demand."

The European car sector is on course to fall short of last year's disastrous showing after producers in the region logged their worst September sales in more than a quarter century.

The global component shortage that is snarling production lines has caused prices for vehicles -- new and used -- to jump as inventories have dwindled.

The latest assessment from ACEA is a blow to the expectations of some researchers that the semiconductor shortage will subside next year.

IHS Markit expects European car production to climb 16 percent to almost 18.6 million units next year -- output that would bring the industry closer to pre-pandemic levels of around 20 million. ACEA will publish its 2022 forecasts early next year.

The lobby group in its accompanying letter also called for action to reduce dependency on Asian chip suppliers to avoid future supply-chain disruptions.

"The gravity of the situation requires a strong and coordinated response across the European Union," ACEA President Oliver Zipse, who is also BMW CEO, wrote in the letter.

[chassis]

Originally Posted by BMWCCA1

Strange correlation since the chip shortage really didn't cause problems until the 2021 model year for most manufacturers.

BMWCCA1 Yes, and I used a sample size = 1. MB had a failed launch in 2020 for the GLE/GLS and prices for 2020 of those models are below the 2019 models, which are on an "older" platform. MB couldn't get the vehicles produced because of the pandemic, so supply was limited. It should increase prices, correct? Prices for these models are in fact lower than earlier models, because the first year launch models for the X/V167 GLE/GLS are garbage.

[chassis]

Ford, GM and BMW are talking in unison about problems into 2022 for semiconductors. Some news releases are talking about problems "maybe" into 2023.

It's a safe bet that normalcy in full across the industry won't return to the new vehicle production world until 2024 at the earliest.

There will be winners (possibly BMW and Ford) and there will be losers (likely MBAG and others), related to semiconductor crisis handling.

[SteveinArizona]

Originally Posted by LogicalApex

I am out until at least 2026. As I think it will be rough for a while yet.

First, you have the component shortages upending the market and leading to widespread and seemingly random decontenting. Like the 5 Series loosing the surround view cameras and Digital Key features BMW heavily advertised last year. As it stretches on to being 3 years as it is looking like you’ll see the industry designing around them missing for a while. Once supply starts to normalize all of this will need to move back into place.

Meanwhile the shortages will inflate car prices for the foreseeable future. Do you are paying more for less.

I see it much like a rubber band and it will take a while to fully go back to its normal relaxed state.

I agree.

With my GEICO mechanical breakdown insurance, I have until December 2024 before I need to be concerned about replacing my car. I am now glad that I did option out my car as it looks like I will be keeping it for a total of at least seven years and maybe longer.

[stein_325i]

Originally Posted by chassis

Prices for 2020 of those models are below the 2019 models, which are on an "older" platform. MB couldn't get the vehicles produced because of the pandemic, so supply was limited. It should increase prices, correct? Prices for these models are in fact lower than earlier models, because the first year launch models for the X/V167 GLE/GLS are garbage.

Not sure about where you're at but over here used GLE 350's (2020's) are selling well above their original asking price even with milage over 15k, even more so for 450's, and 53's are in six-figure territory used. I found one with a similar spec to mine for sale at $76k with 30k miles! Also I assume you mean 2018 models because only the coupe in AMG variants was offered in 2019.

[chassis]

Originally Posted by stein_325i

Not sure about where you're at but over here used GLE 350's (2020's) are selling well above their original asking price even with milage over 15k, even more so for 450's, and 53's are in six-figure territory used. I found one with a similar spec to mine for sale at $76k with 30k miles! Also I assume you mean 2018 models because only the coupe in AMG variants was offered in 2019.

No, 2020 models. Have a look at cargurus home page, scroll to the bottom and look at price trends. A full complement of X/W166 models were sold as 2019 models.

[stein_325i]

Originally Posted by chassis

No, 2020 models. Have a look at cargurus home page, scroll to the bottom and look at price trends. A full complement of X/W166 models were sold as 2019 models.

Forgot that they did sell the GLE400 in 2019 (350 discontinued that year). Looks like the market for 2019 models is a lot smaller (about 25% of 2018 and half of 2020's) with majority of models being Coupes and AMG trims, compared to 2020's majority of 350's.

As for the GLS, cargurus for 2019 to 2020 the trend was upwards from $68k to $87k.

[chassis]

stein_325i

Yes the trend was upward for GLS. Compare a wider time horizon and compare 2019 vs 2020 prices for the same model. Coupe/SUV data doesn't exist so it's not possible to entertain this in the discussion. Data furthermore doesn't exist for engine and option content in the sales price data, so it also is not germane to the analysis. Mannheim auction data would be compelling. Do you have access to robust (large sample size) auction sales data?

GLE 2020 models carry consistently lower prices than 2019 GLE models. The 2020 GLE launch was a bellyflop for MBAG.

GLS 2020 models were introduced later than GLE, and presumably had some of the many GLE launch failures partially addressed. So it's conceivable the X167 GLS had a less bumpy introduction than the bellyflopped GLE launch.

IMO the 2019 GLS and GLE are the best pre-owned MBs on the market today.

[Biggie335]

I dont know if this is typical Sales Advisor BS or maybe they have insight we dont but my SA and His Manager seem pretty confident the shortage will not impact the LCI for the 3 series next year - they seem to think the shortage will be less impactful by spring 2022 and the issues we are seeing now will be significantly reduced after christmas.

We will see. In the meantime, anyone who wants to make a killing - trade in your 2020/2021 and you'll be laughing all the way to the bank. The demand is insane for used BMWs...Ive been hunting for a X3 for my wife for the last month - keep getting out bid.

[chassis]

Originally Posted by Biggie335

I dont know if this is typical Sales Advisor BS or maybe they have insight we dont but my SA and His Manager seem pretty confident the shortage will not impact the LCI for the 3 series next year - they seem to think the shortage will be less impactful by spring 2022 and the issues we are seeing now will be significantly reduced after christmas.

We will see. In the meantime, anyone who wants to make a killing - trade in your 2020/2021 and you'll be laughing all the way to the bank. The demand is insane for used BMWs.

Sales advisor BS. Anything to make the consumer confident they will get the goods they ordered will be said by a car salesperson.

They want your money. Your confidence in a successful transaction is important to them getting your money. Telling you they don't think chips will affect LCI orders increases your confidence and the likelihood they will get your money.

[Biggie335]

Originally Posted by chassis

Sales advisor BS. Anything to make the consumer confident they will get the goods they ordered will be said by a car salesperson.

They want your money. Your confidence in a successful transaction is important to them getting your money. Telling you they don't think chips will affect LCI orders increases your confidence and the likelihood they will get your money.

Yeah - more likelihood of that being the case....obviously BMW demand is still there - shortage or no shortage - and the SA is banking on someone not walking away after a build order is placed even if BMW starts yanking options out of the build.

I do hope though that some of the supply chain issues would be mitigated by the end of winter - at the very least BMW should prioritize parts for custom build orders from people who have already purchased the car - and yank options from cars the dealers will hold on their lot for walk ins etc.

[FLDataTeK]

Yep my friend ordered a car and it has been delayed and also one of the features he really wanted is no longer available due to the chip shortage.