Semiconductor shortage forces automobile production cuts

By Tom Krisher

DETROIT – A widening global shortage of semiconductors for auto parts is forcing major auto companies to halt or slow vehicle production just as they were recovering from pandemic-related factory shutdowns.

Officials at Volkswagen, Ford, Fiat Chrysler, Toyota and Nissan all say they have been hit by the shortage and forced to delay production of some models in order to keep other factories running.

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

Toyota was forced to cut production of the full-size Tundra pickup at a factory in San Antonio, Texas. Ford had scheduled down time next week at its Louisville, Kentucky, assembly plant, but moved it ahead to this week. The plant makes the Ford Escape and Lincoln Corsair small SUVs. Fiat Chrysler has temporarily car closed factories in Brampton, Ontario, and a small-SUV plant in Toluca, Mexico, while Volkswagen said in December it was facing production slowdowns due to the shortage. Nissan said it has had to adjust production in Japan but hasn’t seen a significant impact so far in the U.S.

Industry officials say semiconductor companies diverted production to consumer electronics during the worst of the COVID-19 slowdown in auto sales last spring. Global automakers were forced to close plants to prevent the spread of the virus. When automakers recovered, there weren’t enough chips.

In many cases, automakers have stopped making slower-selling vehicles in order to divert the chips to hotter segments of the market including pickup trucks and SUVs.

“This will minimize the impact of the current semiconductor shortage while ensuring we maintain production at our other North American plants,” Fiat Chrysler said in a statement.

The auto industry is using more semiconductors than ever before while producing new vehicles with electronic features such as Bluetooth connectivity and driver assist, navigation and hybrid electric systems. Semiconductors are typically silicon chips that perform control and memory functions in products ranging from computers and cellphones to vehicles and microwave ovens.

Auto sales plunged during the first wave of lockdowns in April but have since recovered significant ground. U.S. new vehicle sales were down 34 per cent during the first half of last year, but recovered to end the year down only 15 per cent.