Volvo Cars, based in Sweden, recently revealed that they believe supply chain problems will continue to be a huge problem for the auto industry and that it will continue to harm profits and sales throughout the year. This latest news comes as the company posted earnings below expectations — with only supply shortages and supply chain problems to blame.
There is large consumer demand for Volvos around the world, especially in the United States and China. However, much like other auto manufacturing companies based in the U.S. and worldwide, the global supply chain, which was disrupted by the pandemic, continues to be a huge problem and impacts the number of cars that are successfully manufactured and put on the market.
Some automakers have recently stated that there are signs that many of the global supply chain problems — most notably the chip shortages which have kept automakers from successfully meeting this surge in consumer demand — are finally coming to an end. Other automakers, Volvo included, have suggested that these supply chain issues are here to stay and will likely continue to negatively impact business well into 2022.
According to Volvo, the supply chain problems that continue to exist will remain the main factor in their way to success. However, the company is somewhat optimistic that material shortages, mainly chip shortages, will improve, though only gradually. Analysts who follow this line of thinking believe that the beginning of the year will only see a slight improvement in both areas. They don’t believe that anything will change too much or too drastically. As a result, many analysts also don’t see any major signs that global supply chain woes will actually ease up in the near future. If at all, these issues might not begin to work themselves out until later on in the year.
Other automakers, meanwhile, believe that the global chip shortage harming so many companies will finally start to ease away in the second half of 2022. As a whole, recovery may take much longer. The end of the first quarter will give analysts and companies a better idea of the year to come.
Since the pandemic began, the global supply chain has struggled in various ways. At first, when consumer demand was low, the supply chain didn’t completely falter, even with regulations and restrictions put in place because of the constant spread of the COVID-19 virus. However, once people in the United States and around the world because vaccinated in 2021, the existing problems in the supply chain became evident and businesses began to suffer as a result.
The supply chain could not easily meet this huge surge in consumer demand — and we’re still seeing the effects of this. However, some issues have already gone away and many analysts are optimistic that 2022 will help the supply chain recover.
Material shortages, however, could remain. While plans have begun to help with the global chip shortage, there’s no telling when this particular shortage will end. Automakers around the world, therefore, may continue to suffer.
