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VW warns chip shortage threatens car production worldwide

Bloomberg NewsbyBloomberg News
December 21, 2020
in Risk Management
Reading Time: 2 mins read
0

Volkswagen AG is bracing for a major production disruption from a shortage of semiconductors.

The world’s largest automaker will need to adjust first-quarter manufacturing plans around the globe because of the bottleneck, VW said in an emailed statement Friday, without giving specific figures. The number of cars affected could be in the low six-digit range, according to people familiar with the matter.

The situation remains fluid as the reallocation of components to mitigate the impact might distort assembly of vehicles that aren’t directly affected by the chip shortage, said the people, who asked not to be identified discussing internal deliberations. A spokesman for VW declined to comment.

The supply-chain issue could keep VW from getting off to a smooth start next year after the coronavirus undercut manufacturing operations during much of 2020. The world’s best-selling automaker has navigated fallout from Covid-19 relatively well so far, helped by demand snapping back in China, its largest market.

Dealers and lenders alike have still complained that the car industry hasn’t rebuilt inventory fast enough. In addition to supplier constraints, automakers have been stretched thin by pandemic-related absenteeism and protocols to protect workers on factory floors.

Read more: Staffing Woes Put Carmakers’ Remarkable Rebound at Risk

Continental AG, Europe’s second-largest car-parts maker and one of VW’s top suppliers, said it can’t rule out production disruptions related to chip shortages. The company declined to comment on specific customers.

“Due to the usual long lead times in the semiconductor industry, the required additional volumes will only be available with a considerable delay,” the German manufacturer said in an emailed statement. “The potential bottlenecks will extend into 2021.”

Robert Bosch GmbH, the world’s largest auto-parts maker, said it’s working closely with suppliers and customers to maintain as much deliveries as possible.

It’s not clear VW’s German peers will also be hit by a shortage. BMW AG said in a statement it’s monitoring the situation and in contact with suppliers. A spokeswoman said the company isn’t expecting a disruption to production.

Daimler AG’s China chief Hubertus Troska told reporters earlier Friday he wasn’t aware of manufacturing bottlenecks at the maker of Mercedes-Benz luxury cars.

VW cautioned last month that 2021 is shaping up to be a “transition year” and that it might take until 2022 before it returns to pre-crisis financial planning. While industry sales in China have expanded five straight months, another wave of infections hitting Europe has led to lockdowns across the continent, including in VW’s home market of Germany.

(Updates with number of cars that could be affected in the second paragraph.)

–With assistance from William Wilkes.

Tags: inventoryvehicle productionVolkswagen AG
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