Global Carmakers Brace for Production Cuts on Chip Shortage
Honda Cuts or Suspends Production at Some Plants in North America
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Carmakers around the world are planning to scale back production after an export freeze on a Chinese semiconductor company based in Netherlands threatened to disrupt the industry’s supply chains.
Honda Motor Co. said it has cut or suspended production this week at some plants in North America as a countermeasure to the chip shortage, which stems from China blocking Nexperia BV — owned by Chinese company Wingtech Technology Co. — from exporting products made at its local plants. That was a retaliatory move after the Dutch government took control of Nexperia under emergency powers to protect strategic production.
Honda is halving output volumes at its factory in Canada, where it makes Civic sedans and CR-V utility vehicles, while its plant in Mexico was shut down Oct. 28, according to spokespeople.
European carmakers might need to halt production within days, the industry’s main lobby group warned in a statement onOct. 29. The continent’s carmakers are relying on dwindling reserves to keep plants from closing, according to the European Automobile Manufacturers Association. Germany’s Mercedes-Benz Group AG has enough Nexperia chips for the short term, the luxury-carmaker said Oct. 30.
Update on – Critical chip shortage worsening daily.
We are increasingly concerned about imminent disruption to European vehicle manufacturing due to the block in supply of foundational microchips essential to our members’ production.
While the political dispute that… — ACEA (@ACEA_auto)
Volkswagen AG on Oct. 30 warnedit would need sufficient supply of semiconductors to meet its financial targets this year, adding to the challenges for Europe’s biggest automaker. While the Audi and Seat owner has secured enough components for the coming week to keep its German plants running, it couldn’t rule out disruption to production beyond that.
The carmaker may see an operating profit, excluding provisions, in the upper range of a 2% to 3% range for the year, Chief Financial Officer Arno Antlitz said on a call with analysts. He added that net automotive cash flow, a key indicator for financial health, may also be positive.
Separately in Germany, Aumovio SE — an auto-parts makerspun offby Continental AG this year — said Oct. 30 it’s preparing for the possibility of short-term work at its site in Villingen due to the chip supply bottlenecks.
In the U.S., the Motor & Equipment Manufacturers Association said American vehicle plants areweeks awayfrom “significant impacts” on vehicle production if the Nexperia dispute isn’t resolved.
Nexperia makes semiconductors used in vehicle control systems for functions such as activating windshield wipers and opening a window.
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Wingtech, meanwhile, said the Dutch government’s “ill-considered” intervention had harmed Nexperia’s operations and warned the dispute could damage the company’s European business.
“Only by restoring full control and ownership rights to the company’s rightful shareholders and management, and ceasing political interference in corporate governance, can the Dutch government begin to repair the damage to its reputation, de-escalate international tension, and safeguard European economic security,” a Wingtech spokesperson said in an emailed statement.
Ford Motor Co. CEO Jim Farley called the Nexperia conflict a “political” matter and said last week he raised it with government officials during a trip to Washington.
General Motors Co. CEO Mary Barra told investors the chip constraints “have the potential to impact production,” while Stellantis NV said in a statement that it’s “collaborating with Nexperia and other suppliers to assess potential impacts and develop mitigation measures.”
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Toyota Motor Corp., the world’s biggest carmaker, said so far the Nexperia export halt has had a limited effect on production. “Toyota has not been deeply affected at the moment,” CEO Koji Sato said Oct. 29. It is, nevertheless, a risk, he said, adding “it’s only one of the severe elements we face every day.”
Nissan Motor Co. has enough supply to last until the first week of November, Chief Performance Officer Guillaume Cartier said Oct. 29.
“It’s not a small issue,” Cartier told reporters at a car show in Tokyo. He added that Nissan has a grasp of the short-term impact on its biggest suppliers, but has yet to gauge the severity further down the supply chain.
