Automakers shut down assembly lines over key parts shortage

Automakers have begun shutting down many assembly lines due to deepening shortages of key auto parts such as microchips (semiconductors) and seat foam.

Multiple sources including Automotive News reported on Tuesday that production complications had hit major automakers such as Ford, General Motors, Toyota, Honda, Nissan and Volvo since last week.

While some say they will suspend production lines as they await parts, others are selectively choosing which models to produce.

Some are attempting creative workarounds, such as postponing the installation of certain electronic modules until after a vehicle is built.

It was learnt that many automakers, for instance, cannot buy the semiconductors they need because home electronics are taking all the supply.

In a piece titled ‘Lack of tiny parts disrupts auto factories worldwide’, the New York Times, reported, “Strong demand for gaming systems, personal computers and other electronics by a world stuck indoors has sucked up supplies of semiconductors, forcing carmakers around the world to scramble for the chips that have become as essential to mobility as gasoline or steel.

“Virtually no car maker has been spared. Toyota Motor has shut down production lines in China. Fiat Chrysler Automobiles temporarily stopped production at plants in Ontario and Mexico. Volkswagen has warned of production problems at factories in China, Europe and the United States. Ford Motor said it was idling a Louisville, Ky., factory for a week because of the shortage.”

The United States car giant General Motors announced early in the month that it was shutting three plants and slowing production at a fourth due to the semiconductor shortage. The automaker said it could miss its 2021 targets as a result.

“Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021,” a company spokesman said in a statement.

GM also said, “Semiconductor supply for the global auto industry remains very fluid. Our supply chain organization is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impact on GM.”

Several other car manufacturers have also put production on hold. For instance, Honda UK’s main plant in Swindon was shut down for several days last month due to a chip shortage, for example.

Elsewhere, Ford and Volkswagen have also shut plants or cut production while they wait for supplies to pick up.

Ford said in January that it was shutting a factory in Germany for a month, while Volkswagen said in December it would make 100,000 fewer cars this quarter as a result of the shortage.

Speaking about the chip shortage on a Davos panel on January 25, VW CEO Herbert Diess said, “We have to make sure that the markets and supply chains remain intact.”

Falan Yinug, director of industry statistics and economic policy at the Semiconductor Industry Association, says the chip shortage in the automotive industry is largely the result of substantial swings in demand due to the pandemic and the increased use of semiconductors in advanced vehicles.

“The events leading to the current auto chip shortage began during the second quarter of 2020, when automakers understandably reduced production and chip purchases as the virus spread across the globe,” Yinug recently wrote in a blog.

Executive Publisher at the Car Expert, Karl Brauer, said, “The current supply chain issues represent an unusual combination of factors, including shipping constraints, chip shortages and rising consumer demand.

“While consumer demand was a key component in 2020’s reduced new-car sales, production and distribution constraints will likely be the limiting factors for 2021.”