Global Chip Shortage Forces Renault And Stellantis Cut Some Production

A global shortage crucial semiconductors has forced car makers Renault and Stellantis to announce suspension of car production at a number of their factories, the two companies have announced.

There has been a shortage of chips used in engine management and driver-assistance systems of cars which has severely hit production of car makers all across the world. The makers of the chips are mainly located in Asia and particularly in Taiwan.

Demand for chips used in electronics such as laptops and phones have surged significantly during the Covid-19 pandemic as people stayed back home and worked from home and hence there was more demand for such electronic devices for work and entertainment. That surge in demand has caused problems for chip makers to keep up with the demand even as some Chinese suppliers have been hit by the sanctions imposed by the United States under the former president Donald Trump.

A spokeswoman for France’s Renault said that the company would be halting production because of the chip shortage at one manufacturing unit in France and two in Morocco and Romania for a number of days starting this week. The company however did not provide any further details of the potential impact of the suspension on the company.  

The trouble because of the chip shortage is also being felt by Stellantis, the car maker that emerged because of the merger of France’s PSA and Italy’s Fiat Chrysler.

The company was forced to announce suspension of production at its Eisenach factory in Germany on Friday where the company makes its Opel cars,. Production was also halted at the company’s factory at Zaragoza in Spain where the company assembles its and Opels, said a spokeswoman for the company.

Next week, Stellantis has planned to slow production at its Melfi plant in Italy while also furloughing 7,000 workers, said media reports quoting information from union sources.

The global shortage of semiconductors has also affected most of the other major carmakers including Ford, Toyota Motor Corp and Volkswagen.

The auto supplier Robert Bosch has said that this global shortage of chip and the Covid-19 pandemic will weigh in on the production and recovery of car makers in 2021 even though the company predicted a return to growth this year for global automotive production after the industry was severely hit by the pandemic.

The Stuttgart-based car parts supplier has predicted that auto maker globally will potentially roll out about 85 million vehicles off their assembly lines during the current year which would be an increase from the 78 million vehicles manufactured in 2020. However that number will still be significantly lower than the 92 million new vehicles that were manufactured globally in 2019.

Global automotive production hit a high of 98 million units in 2017.

“We are quite positive,” Chief Executive Volkmar Denner said, adding that “we still have a long way to go to catch up.”

(Adapted from TheHindu.com & Reuters.com)

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