The Carbon Revolution Ltd (ASX: CBR) is careening to a 14-month low this morning after it issued a profit downgrade.
The irony is that the surge in car sales is leaving the composite wheel maker behind in the dust, and you can thank COVID-19 for that.
The Carbon Revolution share price crashed 13.5% to $1.34 at the time of writing. The fall is on top of yesterday’s 5.5% tumble – all of which came right at the market close.
Carbon Revolution share price is a wreck
This is because management released the disappointing news a few minutes before 4pm. It revealed that one of its major customers have suspended vehicle production due to the shortage of computer chips.
As a result, Carbon Revolution believes it will sell around 1,800 fewer wheels this financial year compared to FY20.
Management had previously forecast selling around the same number of wheels in FY21 as last year.
The customer in question is expected to restart its production line in late June.
Carbon Revolution share price in the slow land
The world-wide shortage of semi-conductor chips is driving up the price of vehicles around the world, including Australia.
The shortage of new vehicles has been met head-on with strong demand for cars. Consumers who can’t travel and have limited alternative uses for their savings are spending big on new wheels.
The federal government is also pumping fuel into the tank. The extension of the instant tax write-off is also adding to demand for new vehicles.
ASX shares benefiting from car shortages
The lack of supply means car dealers do not have to offer discounts on new vehicles and can charge more for second hand vehicles that are ready for immediate delivery.
The supply chain dislocation is creating winners and losers in the auto industry. New car manufacturers and their suppliers are suffering, while dealers are revving up their engines.
But at least the headwind is temporary. It’s a question of “when” and not “if” supply chains normalise to give the Carbon Revolution share price a chance to play catch-up.
On the other hand, the road to recovery could be a winding one. Just look at the ongoing impact of COVID-19 even when vaccines are being rolled out. Ask anyone in Victoria.