The global shortage of microchips continued to bring down vehicle assembly lines last week, even as industry leaders worked to restore sales volumes derailed by the coronavirus pandemic.
The shortage — widely believed to be caused by sudden competition for chip production capacity as auto sales resurged last year — threatens to slow the industry's recovery.
Last week, the pipeline problem cut into Ford Motor Co's main profit driver, the F-150 pickup. Ford said that because of the supply issue, it will drop two of three production shifts at its Dearborn Truck Plant in Michigan this week, while the truck side of its Kansas City Assembly Plant in Missouri will drop one of three shifts. Both locations produce the F-150.
General Motors said it will stop output this week at three North American plants as a result of the shortage, in Kansas City, Kan.; Ingersoll, Ontario; and San Luis Potosi, Mexico. It will operate its Bupyeong 2 plant in South Korea at half-capacity.
Stellantis said it will idle its minivan plant in Windsor, Ontario, for three weeks. Mazda Motor Corp. said it expects to see an impact on its output this month. Sources told Reuters that Mazda is considering reducing global production by 34,000 vehicles over the next two months. Nissan also trimmed production plans at its plant in Canton, Miss.
Industrywide, the microchip crisis could knock 672,000 light vehicles out of production in the first quarter, IHS Markit forecast last week. And the constraints could linger well into the third quarter.
‘Farther and faster'
"The effect of this is spreading farther and faster than a lot of companies were letting on initially," Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, told Automotive News.
"Chips are so crucial to a modern vehicle that relying on one supplier for your chips opens the door to a problem like this," Fiorani added. "Ensuring that supply is crucial to these companies. While they're definitely nervous at this point, the true problems with the lack of supply is potentially down the road."
Chipmakers did not anticipate that the auto industry would bounce back as quickly as it did from the impact of COVID-19, Fiorani said.
"When you have a large demand for your chips in so many different industries, you have to prepare ahead of time for where are buyers going to be," Fiorani said. "People will buy a phone or video games before they buy a new car, so the chips went elsewhere, and when the economy bounced back quicker than expected and the automotive industry followed that, this was less expected than anyone really thought at the beginning."
As the shortage worsened last week, 15 U.S. senators appealed to the White House to work with Congress. They asked President Joe Biden to secure the funding necessary to implement clauses related to chips in the National Defense Authorization Act. That move could theoretically spur production of chips in the U.S.
"We believe that the incoming administration can continue to play a helpful role in alleviating the worst impacts of the shortage on American workers," the senators wrote.
But considering the time required to create new chip factory capacity, it is not likely that government intervention could bring fast relief to automakers.
Fiorani expects to see some semiconductor players increase their volumes.
But he added: "We're not talking about making something like masks, that are relatively simple to make. It's going to take a little longer for these companies to step up and create the proper parts."
Long-term impact
The next six to 12 weeks will be critical in terms of supply and demand, said Phil Amsrud, IHS Markit's senior principal analyst for ADAS, semiconductors and components.
"It's critical for the entire supply chain to really be on top of what inventory levels are," Amsrud said. "It's going to have to be very collaborative, very transparent, with frequent contacts between the car companies and their suppliers."
After that, Amsrud said, "It's really just being patient as this works its way through."