Ford Motor Co (NYSE: F) is exploring shipping vehicles sans chips to dealers as it looks to mitigate the inventory pileup of unfinished vehicles and keep the manufacturing plants running, Automotive News reported on Thursday.
What Happened: The strategy will help Ford save time and quickly deliver the vehicles to customers once the key missing chips are back in supply.
Only dealers who agree to receive the unfinished vehicles would get shipments and service technicians would be trained on how to install the chips, the report noted.
Ford had in April warned that the global semiconductor chip shortage would cost it about $2.5 billion and about 1.1 million units of lost production in 2021.
Why It Matters: The lingering semiconductor chip shortage has forced automakers across the world, from General Motors Co (NYSE: GM) to Volkswagen AG (OTC: VWAGY), and Tesla Inc (NASDAQ: TSLA) to halt or slow production and rush to make their most profitable models first.
The U.S. new vehicle inventory at dealerships was just about 1.5 million units in June, a month when dealers typically stock 3.5 million to 4 million vehicles to support the summer selling season, as per automotive research firm J.D. Power.
While dealers have fewer vehicles, and customers have fewer options, they have to pay more — and record transaction prices are in turn bringing in more profit for automakers and dealers.
U.S. customers waiting to buy new vehicles have been facing extended delivery lead times, stretching up to six months in some cases due to semiconductor shortages.
As per industry estimates, the average delivery time for Ford’s popular and U.S. best-selling pickup truck F-150 is about four to six months now. The average delivery time is between a month and a half during normal times.
Price Action: Ford shares closed 1.725 lower at $14.01 on Thursday.
Click here to check out Benzinga’s EV Hub for the latest electric vehicles news.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.