Ford, Toyota, Nissan, FCA Will Cut Car Production Due To Chip Shortage

A shortage of semiconductors will force top auto companies to cut vehicle production this month, said Ford Motor Co, Toyota Motor Corp, Fiat Chrysler Automobiles and Nissan Motor Co Ltd.

These four global auto companies are the latest ones to say that they have been hit by a shortage of chip with an increase of demand for ship after the rebound from the novel coronavirus pandemic induced economic crisis.

A shortage of semiconductors could affect its production output in Japan, Honda Motor Co also said.

With global demand for chips growing as economies bounce back after the Covid-19 crisis, there has been a shortage of chips for auto makers and electronic makers which is resulting in delays in manufacturing.

Short term auto production could get limited for the industry because of the chip supply issues, said Credit Suisse analyst Daniel Levy in a research note. However according to industry officials, companies are now focusing on manufacturing of vehicles with higher profit margins.

Since the pandemic, there has been a faster than expected rebound in auto production, major auto chip suppliers such as NXP Semiconductor said, which has resulted in a chip makers finding it hard to keep up with demand.

At the same time, the pandemic induced work and study from home regimen has also meant that laptops were being sold much faster while PCs and gaming consoles sold more as people stuck at home looked for entertainment. This has resulted in stretching of chip manufacturing capacity. Hence warnings of supply constraints have been issued by chip makers such as Nvidia Corp.

Further, chip firms across the world have also been forced to quickly find new partners because of the measure by the United States regulators to blacklist China’s Semiconductor Manufacturing International Corp which is the largest contract chipmaker of the country.

A planned week-off in production halt scheduled for later in the year was advanced by American auto giant Ford as the company announced idling of its Louisville, Kentucky, assembly plant, which builds the Ford Escape and Lincoln Corsair SUVs.

The restart of production at its Toluca, Mexico plant would be delayed by it where it manufactures the Jeep Compass, Fiat Chrysler said, and added that it would also temporarily halt production at its Brampton, Ontario plant that builds the Chrysler 300, Dodge Charger and Dodge Challenger cars.

FCA said that it had planned to restart production at its Mexican plant next week but now the company will keep boht the plants shut till at least the end of the current month.

Manufacturing if its Tundra full-size pickup truck will also be stopped by Toyota which are made its San Antonio, Texas, plant, the company said. However how many units would be lost because of the halt in production was not made clear by company spokesman Scott Vazin.”We’ll throttle back production,” he said, adding no other U.S. vehicles were affected.

“We are working closely with suppliers to address potential production constraints tied to the global semiconductor shortage,” said Ford spokeswoman Kelli Felker.

(Adapted from Investing.com)

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