The global semiconductor shortage is expected to continue negatively affecting the automotive industry’s production and sales this year. Given the industry’s bleak growth expectation, it could be prudent to avoid stocks such as General Motors (GM) and Ford Motor Company (NYSE:F), which are expected to see large sales declines in the third quarter.Auto manufacturing declined sharply, thanks to COVID-19 pandemic-induced restrictions and a decline in demand for new vehicles. And even as major economies are gradually returning to pre-pandemic levels of activity, the auto manufacturing industry continues to be impacted by a global semiconductor chip shortage. According to Cox Automotive, Edmunds, and J.D. Power/LMC Automotive forecasts, vehicle sales from July through September were down between 13% and 14% year-over-year.
As the semiconductor shortage is far from being resolved, several players are compelled to reduce output and close down factories temporarily. According to forecasts, the semiconductor chip shortage is expected to cost $210 billion in revenue to the global automobile market in 2021.
General Motors Company (NYSE:GM) and Ford Motor Company (F) are expected to witness the largest third-quarter sales declines, so these stocks are best avoided now.