- Automakers are facing a supply shortage of semiconductors, the technology used to make microchips, and are being forced to pause production on certain vehicles.
- In North America, Ford, FCA, Toyota, and Subaru have all had to adjust production schedules; outside North America, VW, Nissan, and Honda have had to do the same.
- The supply disruption could ultimately impact the availability of the affected vehicles, industry analysts told C/D.
Even as automakers adapted to the restraints of a pandemic, the challenges faced by suppliers prevented a smooth return to production after the six-week shutdown in the spring. And although 2020 is now behind us, many of the challenges persist. Now a microchip shortage is forcing automakers to adjust production schedules and, in some cases, pause production once again.
With the consumer electronics industry claiming more and more chips to fulfill increased demand for electronics, automakers are lacking one small but crucial component to build their cars. “Semiconductors are becoming much more important across the entire value chain for a vehicle, and such is the case in more expensive vehicles with more technology, but in particular for electric vehicles,” Gaurav Gupta, vice president analyst at consulting firm Gartner, told Car and Driver. The potential for a shortage of semiconductors—the technology from which a microchip is made—was first noticed in December, as warnings came from automotive suppliers Continental and Bosch.
“Some of these modern vehicles have thousands of semiconductors . . . and some of these things are probably a nickel a piece, and some are probably $150,” said Chris Richard, a principal at Deloitte Consulting who works in the semiconductor segment. “Different cost points, but any one of them can stop your production. A five-cent part can stop your production, or the $150 part.”
Ford, FCA, Toyota, Subaru, VW Having to Adjust
All automakers are feeling the supply crunch, and currently, not all have had to adjust production schedules to properly allocate the supply of microchips. Nonetheless, plenty of others have, including in North America. Ford paused production this month at its Louisville, Kentucky, assembly plant where it builds the Escape and Lincoln Corsair. FCA delayed the restart of production at its plant in Toluca, Mexico, where the Jeep Compass is assembled, and also paused production at its Brampton, Ontario, plant, where the Chrysler 300 and the Dodge Charger and Challenger are built.
For Toyota, the shortage of semiconductors has forced the automaker to reduce production of the Tundra, which is manufactured in Texas. A Subaru spokesperson said it has “modified” production at both its Gunma plant in Japan and its plant in Lafayette, Indiana, where the Ascent, Legacy, Outback, and Impreza are assembled but declined to saywhich models were specifically affected by the semiconductor shortage.
A statement from the Volkswagen Group said that the company “needs to adapt production at its various Chinese, North American, and European locations to the current supply situation in the first quarter of 2021. Models based on the MQB platform of Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Škoda, Seat, and, to a limited extent, Audi are affected.” Reports have said that the VW Golf is particularly affected, but a VW spokesperson said that this isn’t the case in North America.
These adjustments to production could ultimately impact the availability of vehicles on dealer lots, Kristin Dziczek, VP of research at the Center for Automotive Research, told Car and Driver. Nonetheless, Dziczek added, “Automakers are prioritizing the chips they have for the high-demand vehicles.”
Even those that haven’t had to curtail production in North America have taken those steps elsewhere, as is the case for Honda, Mercedes-Benz, and Nissan. Nonetheless, the nature of the semiconductor shortage is that the situation is constantly changing, a reality the spokespeople from nearly all the automakers Car and Driver reached out to emphasized. Pauses to production can be short lived and can also be introduced rather suddenly, keeping some spokespeople from going into specifics.
Kinks in the Supply Chain
A convergence of macroeconomic and political events led to the semiconductor shortage, Gartner analyst Gupta said. In the spring, demand for cars fell. In response, automakers cut orders for microchips. At the same time, the demand for consumer electronics—notably the PlayStation 5 and Xbox Series X, as well as laptops and desktops for working from home—skyrocketed. Microchip suppliers adjusted production accordingly, and now that car demand has recovered much more quickly than expected, suppliers haven’t been ready to respond.
“With lead times of six to nine months, the semiconductor industry has not been able to scale up fast enough to meet this unexpected growth in automotive demand,” auto supplier Continental told Car and Driver in a statement. “The bottlenecks from the semiconductor industry are expected to continue well into 2021, causing major disruptions in Continental’s production.”
Additionally, several moves by the Trump administration in the U.S.-China trade war resulted in fewer semiconductors coming into the marketplace, ultimately exacerbating the supply glut, Gupta said. And then, lastly, the older microchips that the auto industry relies on—commonly referred to as eight-inch wafers—can’t be produced quickly enough by automotive chip manufacturers such as NXP Semiconductors and Infineon due to manufacturing limitations.
Through the second half of last year, new-vehicle inventories were much lower than the industry prefers, and although inventories have made a recovery, they are still lower than where they were at this time last year. Automakers are attempting to taper back production of vehicles that have higher inventories. Still, to take one example, there is a less than 30-day supply of the Toyota Tundra, which has had production cut back, according to Cox Automotive.
Similar to the supply challenges the automotive industry faced in the second quarter of 2020, the full impact of this semiconductor shortage likely won’t be completely understood until it’s behind us. The same goes for the degree to which dealer inventories, and therefore consumers, are affected.
One thing is for certain, though: the impacts and challenges of the pandemic are far from behind the auto industry.
This content is imported from {embed-name}. You may be able to find the same content in another format, or you may be able to find more information, at their web site.
This content is created and maintained by a third party, and imported onto this page to help users provide their email addresses. You may be able to find more information about this and similar content at piano.io
Source: Motor - aranddriver.com
