The news for automakers continues to get worse as the chip shortage is causing more companies to idle production.
Toyota, for example, plans to cut global production by 40 percent in September. The cuts include 14 Japanese factories and overseas plants. The reduced production numbers for September will be in the Japanese, United States, Chinese, European, and Asian countries. The company insists that it will still make its annual sales and production targets, though.
Meanwhile, over at Ford, their Kansas City assembly plant – where the F-150 is built – will idle production because of a lack of semiconductor parts. The shutdown will begin on August 23rd and extend through the workweek, including one less shift on Saturday, August 28th.
Volkswagen might have to idle production as well, given the semiconductor shortage and its inability to source enough chips for its vehicles. No official announcement about a production stoppage has been made at the time of this writing, however, a VW spokesman has noted that they expect the chip situation to be volatile in the third quarter. If the shortage continues, they might be forced to idle production.
Photo by Nikola Ilic via iStock
Automakers are in a strange situation in which there is incredible demand for new vehicles, but the supply chain disruptions caused by the pandemic are making it increasingly difficult to get new vehicles to showroom floors.
As the Delta variant of the virus sweeps around the world and renews the strain on chipmakers to meet demand, it stands to reason that the chip shortage will worsen before it gets better.
In fact, the chip shortage is affecting more sectors than ever before – cars, smartphones, gaming consoles, and Tesla Powerwall home batteries, to name a few.
Photo by Traimak_Ivan via iStock
With idle production on so many automakers’ assembly lines, the question is, how long until the chip shortage is over?
That’s hard to pin down, but some experts say it will last at least a year or two. Chipmakers are already working at maximum capacity to try to fill the demand for chips, but semiconductors take as much as six months to make, so it’s not like they can be made and shipped out with the flip of a switch.
The big question for automakers is this: How many idle production days are in the future? Unfortunately, there’s really no way to know. So far, companies like GM and Ford that have had repeated temporary shutdowns have been able to manage the chip shortage okay. But my guess is that more delays will occur through the end of the year and into next year before things hopefully stabilize.