Global chip shortages have caused a sudden freeze for Volvo cars through January as component supply chain pressures amped up profit warning sirens. Sales in the U.S. fell by 13 percent and Europe experienced a drop of 25 percent. In a normal year, automotive manufacturers consider a drop in demand of 2-4 percent as a poor trading period. The drop in sales that has befallen Volvo is huge.

The irony is that demand remains strong, so what goes up, must come down and then will surely rise up again. In the end, over the course of the year, trading and sales will balance out. However, Volvo executives will be sweating over the profit and loss screenshots.

Conversely, the constriction of the semi-conductor supply chain was brought on by consumer demand. This demand was caused by the Covid 19 Pandemic. As people began working from home they purchased tech items to assist in setting up the home office.

And this consumer behavior has had a worldwide impact because every technology item we use is controlled by a computer chip, which is essentially a digital brain. This in turn caught micro-chip manufacturers off guard causing a supply and demand blockage.

Nevertheless, while supply chain issues will continue to ease, global chip shortages will continue into 2022. Volvo did try its best to remain upbeat, revealing that the XC60 was the company’s best-selling model for January followed by the XC40 and the XC90.