Everyone Has a Different Opinion on How Long the Chip Shortage Will Last
The chip shortage is still wreaking havoc on the auto industry. When will the madness end? It depends on who you ask.
Written by Andrew Koole
Reviewed by Kathleen Flear
Since the drop in demand for
new cars
brought on by the COVID-19 pandemic, automakers have struggled to resecure the supply of semiconductors. The effect on production and sales has been catastrophic and well documented.Everyone can agree that the chip shortage has gone on for too long. But what they can’t agree on is when it will end. Within the span of two days, executives from BMW and Volkswagen projected two vastly different expectations for when the crisis will end.
BMW vs. Volkswagen: who’s right about the chip shortage?
On April 9, Volkswagen CFO Arno Antlitz said chip supply is unlikely to match demand until 2024. Only two days later,
Reuters
reported BMW CEO Oliver Zipse as saying he expects to weather the worst of the shortage by the end of this year, with lesser effects trailing into 2023.Is Zipse wearing rose-colored glasses or is Antlitz focusing too much on the negative? Well, as with most issues concerning the supply chain, it’s a little more complicated than that.
For one thing,
BMW and Volkswagen
are vastly different enterprises. While BMW Group (BMW, MINI, and Rolls-Royce) sold 2.5 million units in 2021, Volkswagen Group sold 8.6 million. Volkswagen’s production channel is also much larger, with 120 auto plants in 29 countries around the world, while BMW has only 31 production facilities in 15 countries.
VW’s size will make it that much harder to nail down chip suppliers, so its projections are likely more accurate for its own situation, while BMW’s might be more accurate for theirs.
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How BMW and VW are doing, otherwise
Comparing these two German automakers is a little difficult because of their different business models, doing it actually displays a pretty accurate picture of where the auto industry is at right now.
BMW’s focus on the luxury niche helped the company brave the last two years with far less damage to the bottom line than other automakers. Sales actually grew by 8.4% in 2021.
Volkswagen, on the other hand, struggled to
maintain supply
, and global sales dropped by 6.3% from 2020. Battery-electric vehicle sales doubled, but their impact wasn’t enough to make up the difference.That said, comparing the success of these two brands depends on where you set your markers. Despite last year’s drop in sales, VW Group made $2.7 billion in revenue in 2021, the most of any automaker in the world. BMW Group made less than half of that.
BMW vs. VW: ownership costs
As you might’ve guessed, starting prices and
car insurance
for a BMW are much higher on average than than for a Volkswagen. Things get a little closer once you factor in each company’s other brands, but with MINI being BMW’s only modestly priced nameplate, VW still takes the cake here.
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