3 ms·
Having inventory on the shelf during a crisis is a far greater risk to the survival of a company than failing to produce cars quickly enough after unexpected hi
by evandijk70 5y ago
Having inventory on the shelf during a crisis is a far greater risk to the survival of a company than failing to produce cars quickly enough after unexpected high demand. Cancelling chip orders was the safe play, not the risky one.
- jjk166 5y agoHaving inventory on the shelf is only an issue if it cannot be sold, which would only be possible if car sales never resume, an incredibly improbable outcome to the crisis. Everyone knew people would be back to buying cars soon enough. On the other hand cancelling orders carries great risk as no one is going to wait around for you to get more stock, if you miss your opportunity to make a sale it's gone, hence the mad scramble by auto manufacturers to reverse course once it became clear they had miscalculated.
- evandijk70 5y ago'Everyone' did not people would be back to buying cars soon enough. Stock prices of car manufacturers lost 50% of their value. Factories were closed. They could have been closed for months or even years. That is a recipe for a liquidity crisis for a company, of which there is no coming back if you can not borrow money. Moreover, even if it was possible to produce cars, people were worried about a deep economic crisis caused by long lockdowns. Car sales are the first thing to go in such a crisis.