Toyota, Honda, Nissan, Ford and FCA impacted by shortage in semiconductor chips, to cut production

In December, news emerged that vehicle production could be disrupted early this year as the result of a shortage in semiconductor chips, with Volkswagen the first to sound the warning. Now, it looks like that supply shortfall is making its effects known on a wider scale, as more automakers announce that they are scaling back production due to the lack of chips.

Toyota, Nissan, Ford and Fiat Chrysler Automobiles (FCA) said last week that they would be cutting vehicle production in January due to a shortage in semiconductors essential to production, Reuters reports. Honda also said it had begun seeing some impact in the parts supply, and will be reducing its domestic production of the Jazz (Fit) at its Suzuka plant by about 4,000 units this month, according to the Nikkei.

Toyota said it will cut production of its Tundra pick-up truck at its San Antonio, Texas plant, but it was not revealed by how many units. Meanwhile, Nissan said it planned to reduce production of its third-gen Note at its Oppama plant in Japan, but did not provide details of the scale of the cut. The Nikkei had earlier reported that Note production at Oppama would be reduced to about 5,000 units in January, from an initially planned 15,000 units.

In North America, Ford said it would idle its Louisville, Kentucky, assembly plant – which builds the Ford Escape and Lincoln Corsair SUVs – by bringing ahead a scheduled week-off that was originally planned for later in the year, but said that it hopes to have the plant operating again once the week was up.

As for FCA, it said it would delay the restart of Jeep Compass production at its Toluca, Mexico plant, which was supposed to resume next week, and idle both it and its Brampton, Ontario plant, which builds the Chrysler 300, Dodge Charger and Challenger, through the end of the month.

The report indicated that automakers and electronic makers are facing a global shortage of chips as consumer demand has been bouncing back from the coronavirus pandemic, causing manufacturing delays. Chip manufacturing capacity has been stretched thin globally as demand from laptops for working from home have significantly increased, as have that for PCs and gaming consoles.

Major auto chip suppliers such as NXP Semiconductor said that auto production has also rebounded faster than expected from the pandemic, leaving chip-makers struggling to catch up. In December, the Dutch firm had said in a letter to its customers that it would have to raise prices on all products because it is facing a “significant increase” in the cost of materials as well as a “severe shortage” of chips.

Volkswagen had said last month that a shortage in the supply of semiconductors was forcing it to adjust production at its facilities in China as well as in North America and Europe. German automotive component suppliers Continental and Bosch warned about the shortage of semiconductor components, and said that while production is being increased in response, levelling up that supply would take time.

Elsewhere, General Motors and BMW said that they have not been affected yet by the chip shortage, but were monitoring the situation closely.

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