Thursday, May 26, 2022
News Ford, VW, Mercedes, Subaru, More Forced to Stop Production Over Chip Shortages

Ford, VW, Mercedes, Subaru, More Forced to Stop Production Over Chip Shortages

A storm of no chips

Automakers expected some supply chain issues as a result of COVID-19, especially in the early days, but we doubt they were expecting one like this. A shortage of computer chips worldwide, caused by massively increased demand, is causing automakers to idle or slow assembly factories while they wait for parts.

The shortages of semiconductors has been blamed on higher sales of personal electronics. People have been staying home, and they have been buying new tech to make it more productive and enjoyable. Many of the same lines that make chips for home electronics also make them for cars, and car sales themselves have been increasing which has also contributed to the shortages.

Audi, reports the Financial Times, is putting more than 10,000 workers on furlough which is delaying production of some of its vehicles. Audi CEO Markus Duesmann said that it is working to keep the dropped production below 10,000 in the first quarter, hoping to make up for it later in the year. Audi is also slowing production at a plant in Mexico.
Volkswagen announced last month that it was bracing for reduced production at Wolfsburg and Emden plants as a result, while also in Germany, Automotive News reports, Ford is idling a plant for a month while Daimler will cut Mercedes production, putting a priority on electric and high-margin cars while reducing compact car plants.

The same reports says that suppliers Robert Bosch and Continental are facing tight supply and some shortages.

Meanwhile, Subaru reported suspension of operations for two days last week at a plant in Gunma as a result of the shortages. Honda has said it was cutting output at a factory in Japan while Nissan reported doing the same.

Closer to home, Ford is idling its SUV plant in Kentucky this week, though that’s a pull-forward of a previously scheduled downtime. Stellantis is temporarily closing its plant in Brampton, ON, and delaying a restart of a Jeep factory in Mexico, all in an effort to keep other plants running.

Other automakers are likely feeling the same pinch or will begin to shortly. It’s not clear when the shortages will end and when production will be restored at the auto plants to previous levels.

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