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Vehicle production shortages continue as global semi-conductor shortage worsens

12/05/2021 by Tony Williams in Industry news

Global vehicle makers are experiencing production issues resulting in new vehicle capacity being curtailed. COVID-19 restrictions on movements of parts and labour, critical component shortages and even abnormal weather patterns have contributed to the shortages.

Businesses are urged to place their 2021 vehicle orders early to gain a place in production schedules, secure a building slot and avoid delivery disappointment.

General Motors and Ford have said they will temporarily idle more North American factories over a shortage of semiconductors, as the months-long supply pinch continues to hammer a range of auto makers.

General Motors will halt production lines in Spring Hill, Tennessee; Delta Township, Michigan; and Ramos Arizpe, Mexico; for one to two weeks, the company said in a statement. It is also extending shutdowns that began in February and March at factories in Lansing, Michigan; Kansas City, Kansas; and Ingersoll, Ontario.

Ford said it will idle production lines in Chicago, Kansas City, Missouri, and Flat Rock, Michigan, and will cut production in Avon Lake, Ohio.

The pandemic-related chip shortage has hit nearly every major automaker, leading to production cutbacks worldwide that have affected Toyota, Volkswagen, Honda, and others. Chinese electric-vehicle maker, Nio, also temporarily halted production in March. The global auto industry will produce 1.5 million to 5 million fewer vehicles this year than originally planned because of the supply constraints, according to the consulting firm AlixPartners.

Chips of all sorts have been in short supply for months as a surge in demand far outstripped supply across the globe, leaving manufacturers in the lurch.

The roots of the shortage lie in the early weeks of the pandemic when auto plants worldwide abruptly shut down amid stay-at-home orders. Auto sales fell by almost half between February and April last year. As a result, car companies and their parts suppliers drastically cut their semiconductor purchases.

At the same time, demand for computers and other electronics soared as many consumers began working from home. That caused electronics manufacturers to step up their chip purchases. When auto demand bounced back, car companies found semiconductor factories too busy with other orders to fulfil their needs.

Chip factories cost billions of dollars to build or expand, so there is no straightforward way to quickly boost production.

The cold snap that hit Texas in February worsened the supply shortage by knocking two chip factories in Austin offline. On March 11, the owner of those facilities, NXP Semiconductors, said they had resumed operations. The interruption cost the factories about one month worth of production, NXP said.

Nigel Malcolm, CEO of Fleetcare, summarised the position “It’s an unprecedented situation when so many vehicle manufacturers are struggling to satisfy customer demand. Some manufacturers are coping better than others and our sales teams can help advise on alternatives, but the best advice is to lock in replacement orders as soon as possible to avoid disappointment in vehicle replacement.”

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