Canadian auto parts maker Magna International Inc. cut its full-year sales outlook Wednesday, expecting a fall in global light vehicle production due to chip shortages and supply chain disruptions.
Chip scarcity has hampered automobile production around the world, bringing some assembly lines to a halt, with automakers warning the chip shortage could extend, even as vehicle demand booms in markets including the U.S.
The company said it expects 2021 sales of $35.4 billion to $36.4 billion, compared with $38.0 billion to $39.5 billion forecast earlier. Magna added it expects light vehicle production to fall seven per cent in North America and nine per cent in Europe this year.
Magna, which is scheduled to report third-quarter results on Nov. 5, also cut its adjusted operating margin forecast to between 5.1 percent and 5.4 percent from 7 percent to 7.4 percent, citing automakers’ unpredictable production schedules and higher commodity costs.
According to an estimate by AutoForecast Solutions LLC, automakers have cut more than 9.6 million vehicles from their production schedules due to the chip shortage this year. LMC Automotive said it expects annual production to improve in 2022 before becoming more typical of pre-pandemic years in 2023.
This is the second time Magna has cut its outlook since August, when it reported second-quarter earnings. In a previous May outlook, the company had anticipated sales of between $40.2 billion and $41.8 billion.
Magna said it sees annual light-vehicle production falling 7 percent in North America and 9 percent in Europe from the levels it expected in its August outlook. That month, the company anticipated 14.4 million units of production in North America and 18.1 million in Europe.
Magna’s U.S. peer, Aptiv plc, lowered its annual sales forecast earlier this month, citing the chip shortage.
Magna ranks No. 4 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $32.6 billion during its 2020 fiscal year.
John Irwin of Automotive News contributed to this report.