Currently reading: Semiconductor crisis: latest updates as chip shortage cripples industry
Production slowly improves, with some firms believing the worst is over
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5 mins read
15 October 2021

As the shortage of semiconductor processing chips continues to impact the automotive and technology industries, several leading car makers have been forced to close production lines temporarily. 

The crisis has been affecting companies for almost a year. It initially stemmed from increased demand for personal computers, tablets and smartphones at the height of the Covid-19 pandemic, which largely diverted supply away from the automotive sector, and now extends to Covid-related closures at semiconductor factories and international shipping ports.

Previously, Autocar reported that a number of manufacturers were urgently seeking to overhaul their components supply chains as a workaround to ensure continued production. Analysis company IHS Markit said at the time that the shortage could cut global production by nearly 700,000 vehicles year on year, although the final figure could be even higher.

Ford

Ford is still feeling the impacts of the semiconductor shortage, with the production of the Fiesta stalled from May to the middle of July. The firm’s Turkey-based factory, where the Transit is manufactured, was also closed over the summer, reports Fleet News. 

Some Ford models are being shipped with some missing features, including sat-nav, with retrofits expected. 

“I think the issue will be around for a while – probably until Q1 next year,” Ford fleet director Neil Wilson told Fleet News. “It will ease, but there will be challenges going forward and we have to be good at reacting to those challenges.”

The US firm previously cut production output at its Cologne plant as a result of Covid-related supply issues from a chip producer in Malaysia, the firm told Automobilwoche, sibling publication to Automotive News Europe. 

According to the Automobilwoche report, management announced in a letter to employees that due to a lack of door modules, short-time work would be requested for the next two weeks, starting on 17 August. The Focus, produced at the same facility, is not affected by the cuts, the firm said. 

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Hyundai

Hyundai has hopes to develop its own semiconductors to reduce its reliance on external chip makers, said the firm’s global chief operating officer. 

The Korean giant had said August and September were the “toughest months,” but that the worst had passed. "The (chip) industry is reacting very, very fast," Munoz said, who then added that Intel is investing to increase production. 

"But also in our case, we want to be able to develop our own chips within the group, so we are a little bit less dependent on a potential situation like this," he said. "This takes a lot of investment and time, but this is something we're working on."

Reuters reports that Hyundai aims to “deliver vehicles at the level of its original business plan in the fourth quarter, and offset some of its production losses next year.“

Jaguar Land Rover

JLR issued a warning to leasing companies that the lead time for 53 model variants extends to over a year, with 2022-model-year Land Rover Defender, Land Rover Discovery, Land Rover Discovery Sport, Range Rover Evoque and Jaguar E-Pace models all impacted, reported Fleet News.

“Like other automotive manufacturers, we are currently experiencing some Covid-19 supply chain disruption, including the global availability of semiconductors, which is having an impact on our production schedules.  We continue to see strong customer demand for our range of vehicles,” JLR said in an earlier statement to Autocar. 

“We are working closely with affected suppliers to resolve the issues and minimise the impact on customer orders wherever possible,” it added.

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Mercedes-Benz

The German firm had to temporarily reduce its optional equipment list on some models to minimise delays, Fleet News reported, “from late June production and until further notice”.

Electronic options such as a foot-operated boot release, wireless mobile charging pads, audio devices and LED headlights will be removed on some models, impacting AMG-Line models most significantly.

“Regardless of the model, we take into account how long a customer has been waiting for their vehicle and try to prioritise accordingly,” it said. “Nevertheless, handovers to customers are strongly dependent on the individual equipment and the short-term availability of parts.”

The firm expects the impacts of the shortages to continue into the second half of this year. 

Nissan

Nissan’s Sunderland plant has been feeling the impacts of the semiconductor shortage for six months, reports the Sunderland Echo.

“The global shortage of semiconductors has affected parts procurement in the auto sector,” a Nissan spokesperson said. "Due to the shortage, Nissan is adjusting production and taking necessary actions to ensure recovery.” 

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Toyota 

Toyota is set to cut global car production for the third time in November, but the firm will still expect to have its most productive November ever, Automotive News Europe reports. 

While the firm is still feeling the impacts of the shortage, the damage is not expected to be as severe as with the Japanese firm seeing signs of recovery. 

"I think we are over the worst period," Toyota global procurement manager Kazunari Kumakura said.

The firm hopes between 850,000 and 900,000 vehicles will be produced for worldwide distribution, which is a 15% cutback from Toyota’s targets to produce 1 million vehicles this November. Kumakura says Toyota would have hit the 1 million mark had supply issues not been as impactful. 

Output is also expected to recover from December onwards, though six of it’s 28 factory lines are expected to close in November, including four in Japan.

"We are now coordinating both internally and externally with our suppliers to see how much we can make a recovery in December and beyond," Kumakura said. "We target a high production level for December and beyond, so we will try our best to make as many vehicles as possible."

Toyota previously cut production by 40% in September because of the global semiconductor shortage and Covid-19 impacts in Asia. 

The shutdown, which impacted 14 Toyota factories in Japan and 27 out of 28 production lines, lasted a full month with major impacts in Japan, Europe, China and the US.

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Volkswagen Group

Volkswagen Group is still expecting an uphill battle in the production of semiconductors. 

"We currently expect supply of chips in the third quarter to be very volatile and tight," VW told Reuters. "We can't rule out further changes to production."

VW said it expects the situation to improve by the end of the year and aims to make up for production shortfalls in the second half as far as possible.

Audi previously extended its summer break by a week at its two Germany-based factories. Meanwhile, Seat halted some assembly operations in Barcelona earlier in September, having opened its factory during the annual summer break to get back on track following a production shortfall earlier this year.

READ MORE

Analysis: chips are down for car makers as shortage continues​

Global chip shortage: Audi furloughs 10,000 staff as production slows​ (from January)

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GlobalMarket 19 October 2021

Automobile manufacturers across the globe have anticipated huge earnings cut due to chip shortages in the automotive industry and adopted drastic measures to cope up with the situation.

Strider 23 August 2021

It isn't only because of strong demand from consumer electronics. If the journalist researched more rigorously (ie not just beleiving everything the vehicle manufacturers told him), he'd see that the chip makers are pretty open about the consumer electronics manufacturers being prioritised because the vehicle manufacturers bailed out of existing supply agreements as soon as Covid struck. As one chip CEO said "you cannot cancel your contract and then expect to turn the taps back on when you want supply again." You'll see from the article that the vehicle manufacturers with the most agressive purchasing policies are the ones that are suffering most. 

Bimfan 22 August 2021

It's hard to tell how much of this media trumpetted shortage is actually cutting potential production and how much is due to excess vehicles made in the second half of last year and lying around unsold due to dealer Covid shutdowns, and/or general lack of demand as a consequence of buyer uncertainty and significantly increased prices.

Certainly, the manufacturers quoted in the article to be suffering badly, are some of those volume driven marques you would expect to be most affected by the last two issues as well. JLR have many supply/demand issues anyway, outside of silicon chips.  

The dealerships I am currently visiting, do seem quieter than they were last year and in large part are quoting the same, or only slightly longer waiting times, for orders placed now as they have been previously. I have specifically raised this issue with some and they have been either dismissive or quiet on it.