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 several months now. It stems 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.
Last month, Automotive Daily 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 has reported it could lose half of all planned production in quarter two of 2021, with experts believing the impacts of the shortage could extend into the second half of 2021, or early 2021.The Focus production line in Saarlouis, Germany will be on limited producion for much of next month, while closures of varying length will impact Galaxy, Kuga, Mondeo, S-Max and Transit Connect production until 31 July.
Closures will also impact the Fiesta and Puma production lines in Germany and Romania respectively, although to a much smaller degree.
Having earlier paused production of its hugely popular F-150 pick-up truck in light of the semiconductor shortage, Ford also took the decision to halt operations at several factories across the US for two weeks from 3 May.
According to The Detroit News, the affected sites are responsible for producing the F-150, Transit, Ford Explorer and Lincoln Aviator for the US, as well as the Mustang for global markets. It’s not clear how visible the impact of restricted Mustang production will be in Europe.
The site quotes an internal Ford memo addressed to employees from manufacturing vice-president John Savona: “Ford’s North American plants continue to be affected by the global semiconductor shortage – along with auto makers and other industries around the world.
“As you build every vehicle you can for our dealers and customers, our teams behind the scenes are working hard to source additional parts.”
Honda announced an operating profit of $1.9 billion (AUD$2.43 billion) for the fiscal fourth quarter, but lost around 100,000 vehicles of output due to the global semiconductor shortage. The company expects further production losses through April to September, but is hoping to recover from Autumn 2021.
Hyundai has claimed the semiconductor shortage has not affected the Korean car firm as significantly as other manufacturers.
“It hasn’t had the same impact on us that I have read about at other automakers,” Michael Cole, CEO of Hyundai Europe, told Automotive News Europe. “There has been some loss of capacity, but we are confident we can maintain our volumes. We benefit from very good relationships with all our suppliers; therefore, we have been less affected.”
“We have pretty good cover for the next two months,” Cole said.
Jaguar Land Rover
Jaguar Land Rover (JLR) previously paused operations at two of its largest production facilities for at least a week due to a shortage of semiconductor chips.
The manufacturer’s Castle Bromwich and Halewood factories in the UK implemented a “limited period of non-production” as the reliable supply of semiconductors dried up.
Affected models included the Castle Bromwich-built Jaguar XE, XF and F-Type and the Halewood-built Land Rover Discovery Sport and Range Rover Evoque.
The Solihull facility that builds the Range Rover and Jaguar F-Pace has remained in operation, as has the Land Rover Defender factory in Slovakia and JLR plants in Brazil and China.
A spokesman for the brand told Automotive Daily last month: “Like other automotive manufacturers, we’re currently experiencing some Covid-19 [related] supply-chain disruption, including the global availability of semiconductors, which is having an impact on our production schedules and our ability to meet global demand for some of our vehicles.
“We’re working closely with affected suppliers to resolve the issues and minimise the impact on customer orders wherever possible.”
Mercedes-Benz parent company Daimler posted a 13% year-on-year sales increase in the first quarter of 2021 but noted the impact of the semiconductor crisis.
“Daimler anticipates that this shortage could further impact sales in the second quarter,” it said in a statement, although it added that it expects a recovery in the third and fourth quarters of the year.
The firm reduced working hours for 18,500 staff in Germany in line with a reduced production capacity, due to the parts shortage, starting from 23 April. Automotive News Europe reports that affected models include the C-Class, EQC and GLC.
BMW has been largely untouched by the crisis so far, but like other manufacturers was forced to close the Mini production line in Oxford at short notice due to supply of semiconductors drying up.
The situation has now spilled out into a dispute between the company and worker’s union Unite, as a result of BMW’s refusal to use the government’s furlough scheme to pay workers during a succession of production stoppages. According to the Oxford Mail, BMW has threatened to withold workers’ pay unless Unite agrees to new contract terms, which the union argues are unfavourable for the workers.
In response to a Unite statement which condemned BMW’s decision to not use the furlough scheme, a spokesman for the manufacturer told the Oxford mail: “BMW Group was surprised to read the press release from Unite, as the company is in advanced negotiations with the union regarding potential arrangements to ensure that the monthly base pay of associates is maintained during these current stand downs, including those that have already taken place.”
Nissan has reported a record annual loss of 150.65 billion yen, or around $1.776 billion, attributed to production cuts caused by the pandemic partnered with the global shortage of semiconductors.
The shortage has been exacerbated over the last few months by a chip plant fire in Japan and blackouts in Texas, a hotspot for chip factories, according to Automotive News Europe. The shortage has also caused Nissan to delay its intended global expansion, halt production of the Note, and make output adjustments in the North American market last quarter.
“It’s very difficult to forecast what the shortage will be because we have all recognised the challenge, and we are all working hand-in-hand to rectify the situation,” said Ashwani Gupta, Nissan’s chief operating officer. “This is not a one automotive manufacturer problem, this is a whole automotive industry challenge.”
Stellantis previously said that the outgoing Peugeot 308 would see out its production run with an analogue instrument cluster, rather than the digital set-up that was introduced as part of a facelift in 2020.
Automotive News Europe has reported the chip shortage led to additional downtime at other Stellantis sites, with production of the Jeep Cherokee Production in Illinois to remain offline through the middle of May. MPV production in Ontario was also paused from 10 May, expected to last until Sunday 16 May.
The hatchback’s successor was revealed last month, and the news organisation quotes a group representative as saying: “It’s a nifty and agile way of getting around a real hurdle for car production until the ‘chips’ crisis ends.”
The semiconductors Peugeot has supplied will be largely reserved for more popular and newer models, including the 3008 SUV, which aren’t yet set to receive any alterations in light of the shortage.
There hasn’t been any suggestion that the new 308 will be delayed or go without its digital i-Cockpit display.
Tesla has not been immune to the effects of the semiconductor shortage, with CEO Elon Musk acknowledging “some of the most difficult supply chain challenges that we’ve ever experienced at Tesla”.
However, speaking as the company celebrated first-quarter profits of $570 million and record car deliveries in the same period, Musk noted “that particular problem” has subsided.
The firm delivered a record 184,400 cars in the first three months of 2021, despite shutting down production in Fremont, California for two days in February due to unspecified “parts shortages”.
It is not completely clear how Tesla managed to minimise the impact of the shortage, but Musk recently tweeted: “Thanks Tesla suppliers for providing us with critical parts”, hinting at the establishment of a secure supply line. As reported by Forbes, the company was also likely able to divert limited chip supply to its higher-volume Model 3 and Model Y cars, with all deliveries of the Model S and Model X during the period coming from dealer stock.
The Volkswagen Group is expecting the chip shortage to impact second quarter production more severely than the first. The German car maker is in “crisis mode” over the shortage, Herbert Deiss said.
Seat CEO Wayne Griffiths told the Financial Times: “We are being told from the suppliers and within the Volkswagen Group that we need to face considerable challenges in the second quarter, probably more challenging than the first quarter.”
Precise predictions have not been revealed, but the VW Group previously said it was expecting a production shortfall of 100,000 vehicles this quarter. According to the FT, the company has warned it does not have the necessary production capacity to compensate for the drop later in the year.
Griffiths told the newspaper that production at Seat’s Martorell factory is currently “hand to mouth”, and decisions on which cars to produce are based entirely on supply.