VW cuts output at Wolfsburg plant as chip shortage bites

Automotive Industry

Source: Automotive News Europe, 2021-08-20

Volkswagen Group plants are set for a bumpy restart after the traditional summer break as the car industry remains in the grip of a chip shortage that most recently engulfed Toyota.

The automaker's plant in Wolfsburg, Germany, will restart with only one shift next week 23 August through 27 August.

Audi, the group's biggest profit contributor, will extend the summer break by one week at its two factories in Germany as semiconductor supply remains "volatile and tense."

Spanish brand Seat has also partly halted car assembly at its plant near Barcelona due to the global semiconductor supply bottleneck, the company said in a statement on 20 August.

The plant has idled its assembly line number 2 for two days because it lacks chips, the statement said.

Seat, which usually closes down the plant in August for summer holidays, had made an exception and opened the factory this month to offset a production shortfall in the first half of 2021.

But the scarcity of chips eventually forced a partial closure for two days, it said. 

Overall, Seat produced 8,000 cars in August, partly offsetting a shortfall in the first half.

Automakers' recent warnings of rocky months ahead are proving prescient after Covid-19 outbreaks in Southeast Asia forced restrictions at chip-processing plants.

VW in July flagged "really constrained" output during the third quarter, while BMW predicted ongoing uncertainty.

Toyota will suspend output at 14 plants across Japan for various lengths of time through September, succumbing to supply issues it had been navigating better than other manufacturers thanks to stockpiles of chips and other key components.

The impact will be most severe in September, with Toyota slashing its production plan by 40%. 

While automakers have been forced to dial back sales expectations, higher vehicle prices and a focus on major money makers have helped cushion the blow.

According to research by Susquehanna Financial Group, the amount of time it's taking for chip-starved companies to get orders filled has stretched to more than 20 weeks, indicating the shortages are getting worse.

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