Supply constraints and demand pressures that have driven vehicle prices higher at lower volumes but created operational inefficiencies and distress in the supply chain are poised to continue through 2024 even though chip availability continues to improve, according to new industrywide analysis from global consulting firm AlixPartners.
The continued trend delivers a complex backdrop for an industry committing $526 billion through 2026, AlixPartners' analysis finds, to fund the shift to battery-electric vehicles (BEVs). The transition, taking place amid a dampened economic outlook, could cost automakers and suppliers $70 billion if not properly managed, the analysis finds.
New-vehicle pricing has been extremely robust, and AlixPartners expects pent-up demand and employment strength to enable automakers to continue to benefit from finding a buyer for each vehicle they can make despite inflation and rising interest rates weighing on consumers. Consumers are fickle and reactive, but they still view the car market from a position of scarcity. The question of "Can I get one?" overrides the question of "How much do I have to pay?" and used-vehicle pricing suggests the consumer is a long way from feeling they can shop around for a deal.
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