Record demand for cars is set to bolster Canadian parts manufacturers once vehicle production starts to recover from the global microchip shortage, an industry representative said.
Flavio Volpe, president of the Automotive Parts Manufacturers' Association, said Monday auto part suppliers which have idled their plants while car manufacturers wait for microchips are set to come “roaring back” to production once chip supply starts returning to normality.
“As soon as those microchips supplies come back on in the third quarter of this year, I think you will see a roaring comeback for Canadian part suppliers’ volumes,” he said. “People don’t have an alternative: If you want a car and you can’t get a car, we don’t have mass production of hovercrafts or teleporting yet, so you’re waiting for a car.”
Volpe said the recovery for Canadian auto parts makers will be primarily driven by strong consumer demand in the U.S.
The auto sector has been one of the industries that have been hit the hardest by the global chip shortage, triggered mainly by the COVID-19 pandemic. Low production and high demand for vehicles have caused prices to soar for both new cars and used ones.
“We’ve seen some reports where the value of used vehicles have gone up year-over-year,” Volpe said. “It defies logic or every basic principle of macroeconomics except that we had a COVID shutdown, we had a microchip shutdown and that big storm in Texas a few months ago … which knocked down a bunch of chemical refineries so we had resin shortages."
“For the first time in history your dealer can’t deliver the product you want because the plant isn’t open and he or she has got to sell cars and they may buy your used car from you just to get that going.”
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