Magna expects little impact from semiconductor issues

Shortages of semiconductors impacting automotive production are expected to be mostly made up in the second half of 2021, according to original equipment manufacturer (OEM) Magna International.

While impacts from the shortages will be felt in reduced auto production in the first and second quarters of the year, automakers will be able to make up the lost production in the second half of the year, chief financial officer Vincent Galifi said in the company's fourth quarter earnings call today.

Magna's estimates are lower than others, taking into account that there could be some lost production in the year, chief executive Swamy Kotagiri said.

The global semiconductor shortage has hit automakers as they work overtime to make up for lost production in the first half of 2020, when auto plants in North America and Europe were taken off line as governments attempted to stem the spread of Covid-19.

An increase in demand for personal electronics that also use semiconductors, such as laptops and gaming consoles, has put pressure on the global supply and cut off some automakers, forcing production curtailments in North America.

Magna expects North American auto production in Canada and the US to total 15.9mn units in 2021, a 22pc increase from the 13mn vehicles produced in 2020 but lower than the 16.3mn vehicles produced in 2019. North American auto production would return to 2019 levels by 2023, according to the company.

In Europe, automobile production is expected to increase by 12pc in 2021 to 18.5mn units from 16.5mn in 2020. That figure would be 14pc lower than the 21.4mn vehicles produced in 2019.

Production in China is expected to rise to 24mn in 2021, an increase of just 2pc from the 23.5mn produced in 2020 and 2.4pc lower than the 24.6mn produced in 2019.

Magna posted a $738mn profit in the fourth quarter of 2020, a 68pc increase from the year-earlier period. Total 2020 profits were $757mn, a decrease of 57pc from a $1.77bn profit in 2019.

By Rye Druzin