Semiconductor Chip Shortage Disrupts the Automotive Industry
A current semiconductor chip shortage is disrupting automaker production for all major car companies. This shortage is global and hits most of the world’s biggest automakers like Daimler AG, Nissan Motor Co., Honda Motor Co., Ford Motor Co., and Volkswagen.
Specific impacts reports by these major automakers are as follows:
Ford Motor Co.
A specific Ford factory, located in Louisville, Kentucky, that assembles the Escape SUV began a weeklong shutdown because it does not have enough semiconductor supplies. It has become the latest automaker to feel the impact of this global chip shortage. The shutdown will lead to the temporary layoffs of about 3,900 workers at the plant, which builds two popular SUVs – the Ford Escape and Lincoln Corsair.
Nissan Motor Co.
Nissan Motor will cut production of its flagship vehicle Note by 5,000 units in January, a reduction that may continue through February.
Honda Motor Co.
Honda will scale back production of vehicles at its Suzuka plant, located in Japan’s eastern Mie prefecture. The plant makes the Fit subcompact which is also marketed as the Jazz. Honda has also decided to reduce the production of its Fit subcompact car by 4,000 units this month at a factory in Japan’s Mie Prefecture. The chip shortage could potentially impact tens of thousands of additional Honda vehicles in the March quarter.
Volkswagen has recently announced that it would cut production in China, North America, and Europe. In Germany, the company also halted production of its Golf model starting in December and will last through mid-January. Meanwhile, Spanish automaker Seat (a Volkswagen brand) will also cut production from the end of January until around April.
Mercedes-Benz maker Daimler AG joined its German peer Volkswagen AG in announcing that it too has been affected by the industrywide supply bottleneck but did not give any quantifiable details on its direct impact to their production.
Fiat Chrysler Automobiles
Fiat Chrysler said it will delay the restart of production for their Jeep Compass following a scheduled break at its Toluca, Mexico plant. It will also schedule downtime at its Canadian plant in Ontario which produces the Chrysler 300, Dodge Charger, and Dodge Challenger.
Toyota has decided to reduce the production of its Tundra pickup truck at its Texas plant in the U.S. due to the semiconductor shortage. The company has not released details on the size or time frame regarding the production cut but is looking into whether the lack of semiconductors will affect other vehicles.
In December, a time traditionally Toyota is detailing its production plans for the upcoming year, Toyota is now communicating to a group of auto parts companies in Japan that it has yet to determine whether it can secure enough semiconductors for annual production. This global semiconductor chip crunch has caused the automaker to struggle to formalize their annual plans.
Additional Automaker Announcements
BMW AG recently reported that it is in regular contact with its suppliers about the issue though it has not yet had to reduce or stop car production. Also, General Motors Co. said it faces no current impact on output but is looking for ways to prevent a shortage at its plants.
Reasons for this short multi-faceted and include:
- The number of people working from home worldwide has increased due to the COVID19 pandemic. This has put an increase in demand for personal computers which is straining demand capacity for globally for chip production.
- Current faster-than-expected growth in production from global automakers, manufacturers of cars, and electronic products.
- An increase in the prices of chips from top semiconduct chipmakers because of the increase in raw materials prices.
- The spread of the coronavirus has impacted procurement in semiconductors and related parts.
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By Hala Mohamed