VW warns of big production hit as chip shortage worsens

Volkswagen has warned executives to prepare for higher production in the second quarter than in the first due to the global chip shortage, according to the company’s Seat brand manager.

“Suppliers and within the Volkswagen Group tell us we face significant challenges in the second quarter, possibly more difficult than in the first quarter,” Wayne Griffiths, president of the Spanish brand of VW, told the Financial Times .

The warning raises the possibility of higher losses for the world’s second-largest automaker, which said last year it expects production to drop to 100,000 vehicles in the first quarter of 2021 due to semiconductor shortages.

VW has already warned that it does not have the factory capacity to recoup lost production later in the year.

Griffiths said the shortage was the “biggest challenge” the company was facing right now.

The balance sheet of the crisis is felt throughout the sector, shortages should affect production until the second half of the year.

Ford closed a dozen facilities in North America and Europe last week, some for months, while Jaguar Land Rover will shut down two of its UK factories this week.

Renault last week completely suspended its production forecast, saying there was too much uncertainty in its supply chain, while Daimler cut the working hours of more than 18,000 employees in Germany to meet lower production levels.

Automakers have already lost the manufacture of hundreds of thousands of vehicles in the first few months of this year, with most major manufacturers announcing production shutdowns that analysts say will cost the industry billions of dollars over the course of the year. of the year.

The crisis, which began last year but was exacerbated by storms in Texas and a fire at a Renesas chip factory in Japan, comes as manufacturers forecast a recovery in demand after the pandemic.

Griffiths, who took on the role last October, said production at Seat’s Martorell factory outside Barcelona is currently ‘hand to mouth’, with the brand deciding which cars to build only after receiving chips from suppliers.

“The name of the game this year will be flexibility,” he said. Once the company receives its chips, it can decide which models to build, switching between hybrid and traditional cars depending on the components it receives.

“We must try to build when we get [chips] available, ”he added.

Across the VW Group, the company has announced shutdowns at several factories, including last week the partial shutdown of production at its plant in Slovakia which builds several of the company’s largest sport utility vehicles.

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