Chip shortage issue – Ford cuts production at German plants; VW expects ‘tense’ situation and tight supply

The semiconductor chip shortage problem has more or less hit the entire auto industry, from our Perodua to the giant groups. Unfortunately, the issue won’t be resolved anytime soon as demand for chips are expected to continue to outstrip supply.

Detroit big gun Ford and European leader Volkswagen are among those affected. Ford said yesterday that it is scaling back production at its German plants in Cologne and Saarlouis for the next few weeks due to chip shortage. Around a third of the 15,000 workers in Cologne will be given reduced working hours from May 3 till June 18, and June 30 to July 9.

“The situation on the global semiconductor market remains tense and, according to all estimates, will continue to be so in the coming months, resulting in supply bottlenecks,” a Ford spokeswoman said.

The company said it planned to make up for lost production “as best we can” and would prioritise vehicles already ordered by customers, Reuters reports. Ford makes the Fiesta and Focus hatchbacks for the European market in Germany.

Over at Wolfsburg, Volkswagen expects chip supplies to the automotive industry to remain tight in coming months. “I think the situation will remain tense,” Ralf Brandstaetter, CEO of the Volkswagen brand and member of the group’s management board, told German news agency dpa last week.

That ‘tense’ word again. Brandstaetter said that a fire at a factory operated by automotive chip maker Renesas as well as snowstorms in Texas, USA had effectively idled output. “The impact will certainly be felt in the coming months,” he said, adding that Volkswagen’s procurement task force was busy around the clock dealing with the issue.

The Volkswagen Group has been unable to build 100,000 cars due to the shortage, CEO Herbert Diess said in March, adding the they would not be able to make up for the shortfall in 2021. However, Brandstaetter said the the chip supply situation is expected to ease somewhat in the second half of the year.

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