Skoda will significantly cut output until year-end

Automotive Industry

Source: Automotive News Europe, 2021-10-07

Skoda will "significantly reduce or even halt" production from 18 October untill the end of the year due to the global shortage of chips hobbling the automotive sector.

"Not even Skoda Auto is able to avoid this global crisis," Skoda Spokesman Tomas Kotera said.

The production curbs are the biggest so far in central Europe, and Economists said they would lead to a cut in Czech growth forecasts.

Skoda, owned by Volkswagen Group, is the Czech Republic's biggest exporter.

The brand has already stocked up tens of thousands of cars finished but awaiting chips. Dealerships are reporting months-long waits for new cars.

Kotera said Skoda wanted to focus on getting the backlog of almost finished cars to customers as soon as possible.

Due to Skoda's outage, overall car production should be similar this year to the 1.15m cars made in the "COVID" year 2020, the Czech Automotive Industry Association said. Previously, the association expected 1.3m cars to be produced in 2021. 

The uncertainty in the car industry is becoming a major drag around central Europe, forcing economies to rely more on a rebound in services or household spending to drive growth.

Data on 7 October showed Czech industrial output fell in August year-on-year for the first time since February amid a sharp drop in car production due to extended holidays.

Besides Skoda, which also halted production at the end of September, Toyota has faced production cuts at its plant in Kolin, including September 2021.

Hungary, where Mercedes-Benz and Suzuki have had to limit some production, also saw output growth shrink more than expected because of the car sector. Output in Germany, the region's key trade partner, slumped in August.

Automakers around the world are struggling with a lack of semiconductor chips amid a post-pandemic rise in demand. Skoda predicted a gradual calming of the situation for chips in the second half of 2022.

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