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CBT automotive newscast: August 23, 2021

Featured Interview:

HaigBuy-sell expert Alan Haig discusses current valuations and M&A trends in the auto industry
Haig Partners has new, recently released data on the profits from the largest public automotive retailers. On today’s show, we’re pleased to welcome Alan Haig, President and Founder of Haig Partners to discuss this data and how the ongoing chip shortage is affecting retail automotive. Watch the complete segment here.

Top Headlines:

Elon Musk says Tesla is building a humanoid robot for ‘boring, repetitive and dangerous’ work. The robot aims to answer the question, what is the work that people would least like to do? It was not announced if the robot would be sold, or for how much. The robot will have a screen positioned where a human face would be to display “useful information.” Musk said, physical work would be a choice in the future and a basic income would be needed. The robot is characterized as an extension of Tesla’s work to build self-driving vehicles. It will use the same computer chip, and navigate with eight cameras, just like Tesla’s vehicles. The robot will stand 5 feet 8 inches and weigh 125 pounds. It will also be able to carry 45 pounds and move as fast as 5 mph.

The investment increase by both new and old automakers in the EV market shows a positive recovery in U.S. manufacturing. According to the U.S. Census Bureau, after falling post-COVID to $361.8 million in April 2020, new orders surged to almost $506 million in June. With the success of Tesla, the growth in EV sectors come on top of the normal work manufacturing equipment makers do to support the production of gas-powered vehicles. According to LMC Automotive, automakers will invest over $37 billion in North American plants from 2019 to 2025 with 15 of the 17 new plants, located in the U.S. More than 77% of the spending will be aimed at SUV or even projects. However, equipment providers are in no rush to add to their nearly full capacity. John Kacsur, Vice President of Automotive and Tire at Rockwell Automation said, “this industry is the wild, wild west right now. There is a mad race to get these EV variants to market.” Automakers have signed contracts for suppliers to build equipment for 37 EVs, now through 2023 in North America. Numerous companies have run out of capacity, leaving no room for additional work. COVID has caused issues and delays for some automakers trying to get equipment. However, General Motors and parts supplier and contract manufacturer Magna International, says they didn’t experience any delays in receiving equipment.

According to IHS Markit, in the first half of 2021, the semiconductor shortage issue was due to wafer, front-end capacity. With the plant disruptions, wafer fab capacity remained tight, but the impact is lower than in the first half. Once the wafers are processed, they are sent to the plant, tested, and then packaged before sending them to a customer to be placed into an ECU and then into a car. COVID also impacted the assembly and test locations. With a vaccination rate of only 12%, Malaysia has been shut down due to an increase in outbreaks. As a result, IHS Markit expects the semiconductor shortages across the automotive sector, to extend into Q1 2022 and possibly into Q2. The global forecast for light vehicle production in 2021 now stands at 80.78 million units, an increase of 8.3% over 2020 levels.

Three Democratic U.S. Senators have asked the Taiwanese government for more help in addressing the chip crisis, that’s left many American auto production lines at times, standing idle. Michigan Senators Gary Peters and Debbie Stabenow and Ohio’s Sherrod Brown said in the letter, “they were hopeful to continue to work with the government to do everything possible to mitigate the risk confronting our state economies.” Taiwan’s Foreign Ministry said, it was aware of the letter and had passed on the request to government departments in charge of trade and economics. The Ministry added, that Taiwan and the U.S. have been closely coordinating and communicating on supply chain issues. They believe that Taiwan and the U.S. can jointly establish a safe and reliable supply chain for key industries.

Keeping up with the ongoing chip crisis, General Motors will idle several of its crossover and sedan plants including the Orion Assembly, which builds the Chevrolet Bolt EV and EUV. Until now, the chip shortage didn’t impact GM’s EV production. The automaker is still on schedule to launch the GMC Hummer pickup EV later this year, and the Cadillac Lyriq electric crossover in 2022. The Orion plant will stop production on August 23 and will resume on August 30. It’s estimated that total production losses could reach up to more than 7.1 million vehicles globally, due to the chip shortage.

News & Opinion:

productionCarmakers scale back production further on semiconductor shortage
Halfway around the globe in Malaysia, COVID-19 cases have spiked badly in the past five weeks, and daily case counts in the nation of around 32 million have been surpassing 20,000 consistently. At least one Malaysian semiconductor chip supplier has been asked to shut their doors for the week by the government due to an outbreak. Malaysia is one of the top producers worldwide for microchips required in the auto industry, and the latest outbreak is hitting carmaker production in the US acutely. Read more

F&IA ‘back to basics’ approach to F&I during slower times
F&I departments nationwide are once again facing challenging times. The one-two punch of the pandemic hanging on due to the Delta variant and the chip shortage has created a unique space where there are fewer new and used cars to sell and finance, and inventory is hard to come by. It’s a mess. But even during wild and unprecedented times, there are opportunities. This could be the perfect time to take a ‘get back to basics’ approach with the extra time on F&I’s hands. With fewer deals to do, F&I staff can refocus on activities that will help them be ready when the market comes back around. Read more

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CBT News
CBT News
For over 11 years, CBT News has been informing and helping automotive retail professionals grow their businesses and thrive in their careers through an awarding-winning, on-demand streaming platform. With exclusive interviews featuring the biggest names in the industry, daily newscasts, up-to-date market data, and exclusive articles covering the latest trends, CBT News is your #1 source for auto industry news and content.

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