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Home » Market Update » IC shortages force car giants to halt production

Just as the car industry starts to recover from Covid there’s now an industry-wide shortage of semiconductors.

All the car giants are halting or slowing production in the face of reduced supplies.

VW, the world’s biggest carmaker, was among the first to announce it would need to adjust first-quarter manufacturing plans around the globe because of the shortage. According to The FT, Volkswagen said that the bottlenecks meant it would produce 100,000 fewer cars in the first quarter of the year at sites in Europe, North America and China, because its parts-makers have struggled to secure supplies from their contractor.

Bloomberg reported that Mercedes-Benz maker Daimler has also announced it is affected by the industrywide supply bottleneck, with Honda saying it will cut domestic output by about 4,000 cars this month at one of its factories in Japan; Nissan is adjusting production of its Note hatchback model.

Slash Gear says “a new report is making the rounds that Ford and Fiat Chrysler Automobiles have been forced to idle some production facilities due to a shortage of semiconductors. Ford has idled the Louisville Assembly Plant in Kentucky for a week, with plant managers taking a down period from later in the year to compensate. Meanwhile, FCA has idled its Brampton facility in Ontario, Canada, and one other site.”

“This is absolutely an industry issue,” Toyota spokesman Scott Vazin told ABC News. “We are evaluating the supply constraint of semiconductors and developing countermeasures to minimize the impact to production.”

Electronics Weekly spoke to parts supplier Continental, who said, “Although semiconductor manufacturers have already responded to the unexpected demand with capacity expansions, the required additional volumes will only be available in six to nine months. We therefore expect the potential delivery bottlenecks may last into 2021.”

Industry experts believe the situation is going to get worse.

The auto industry is using more semiconductors than ever before in new vehicles with electronic features such as Bluetooth connectivity and driver assist, navigation and hybrid electric systems. Electronics make up 40 per cent of the cost of a new car, reports AutoExpress, with the figure set to rise over the next decade.

Deloitte’s research, Driving Connectivity – Future of Automotive Technologies, projects that by 2030, electronics could make up between 45 and 50 per cent of a new car’s value, with the report’s authors predicting: “Consumption of automotive electronic components for safety, infotainment, navigation and fuel efficiency will increase for years to come due to ever-more electronic components being applied in advanced safety features added to vehicles.”

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