Automotive executives are startled by a global shortage of semiconductors hitting manufacturing in China, after hoping the world’s largest auto market could lead the industry’s global recovery.
Automakers around the world have had to adjust assembly lines due to the shortages caused by manufacturing delays that some semiconductor manufacturers blame for a faster-than-expected recovery from the coronavirus pandemic.
Volkswagen AG (VOWG_p.DE), China’s largest foreign car manufacturer aiming to sell more than four million vehicles in the country, said the impact of the deficit in the second quarter of this year remains unabated.
Stephan Woellenstein, Volkswagen’s Chinese chief, told reporters on Sunday that it was difficult to estimate how much production Volkswagen would lose from week to week or even month to month due to the shortage of chips.
“It’s like firefighting … In some cases, we’ve switched to a different chip, so we’ve switched suppliers,” he said ahead of the Shanghai auto show that kicks off Monday.
China, where more than 25 million vehicles were sold last year, is a ray of hope for automakers, including Volkswagen and General Motors (GM.N), as the global auto industry was hit hard by the pandemic.
However, China is also where news of the auto chip shortage first emerged last year. The shortage was exacerbated by a fire at Renesas Electronics’ chip factory (6723.T) in Japan in March.
Automotive companies accounted for about a tenth of the $ 429 billion semiconductor market in 2019, according to McKinsey, with NXP Semiconductor (NXPI.O), Germany’s Infineon (IFXGn.DE) and Renesas among the industry’s top suppliers.
Automakers including Nissan Motor (7201.T), Ford Motor (FN) and Nio Inc (NIO.N) said they are discontinuing production due to the shortage of chip stock.
Li Shaohua, senior official at China’s Automotive Manufacturers Association, said chip supply shortage hit car production by 5% to 8% in the first two months of this year and expects the impact to diminish from the third quarter of this year. .
As a result, the China Automobile Dealers Association said it expects China’s auto inventory to continue to decline as the chip shortage affects overall auto production. The supply of some car models may not be able to meet the demand, he said.
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