Automakers feel chip crisis easing as global growth slows

Manufacturers are cheering the chip-supply improvement but are not declaring victory yet.

“We are still monitoring it week to week, but up to now basically worldwide, we had no issues running production,” said Joerg Burzer, Mercedes’s head of production and supply-chain management. Supply issues occur “here and there,” he said, “but nothing compared to what it was like last year.”

Even as demand for cars boomed, automakers have had to curtail output as plants globally could not source enough chips critical for increasingly computerized vehicles.

The outages have been so severe that global passenger car output has barely shown signs of recovery to pre-pandemic levels.

As the chip supply improves, automakers are working down their order backlogs, and concerns are turning to how consumer demand will hold up amid accelerating inflation and higher interest rates.

Tesla CEO Elon Musk said the automaker needs to cut staff by 10 percent and that he has a “super bad feeling” about the economy, according to Reuters, which cited an internal memo.

But not everyone is as pessimistic as Musk. German automakers’ sentiment improved significantly in May, according to an Ifo Institute survey. The survey showed growing confidence among the automakers that they will be able to raise prices to cope with soaring raw material costs.