Semiconductor Shortage Halting Car Production across North America
Photo credit: Carlos Osorio via AP
From the car and driver
Across North America, automakers are being forced to adjust their production schedules due to the scarcity of microchips.
General Motors, Ford, Stellantis, Toyota, Volkswagen, Honda, Nissan, and Subaru have adjusted production at some of their North American plants to properly map the chips.
The shortage is forecast to cost the industry $ 61 billion worldwide and one million fewer vehicles will be produced worldwide in the first quarter of this year.
The first signs of a semiconductor shortage appeared late last year, and now, a month and a half after 2021, the magnitude of the impact is becoming apparent. In factories across North America, production schedules are being adjusted to properly map the limited number of microchips, which are made up of semiconductors, and reach the automotive assembly plants. As the New York Times recently noted, a new car or truck can contain up to 100 chips as essential components in everything from the touchscreen to the transmission.
General Motors, Ford, Stellantis, Toyota, Volkswagen, Honda, Nissan and Subaru had to adjust production due to the semiconductor shortage. By and large, automakers are prioritizing their high-margin vehicles like trucks and SUVs and reducing production on high-inventory vehicles - but that hasn't stopped vehicles like the Ford F-150 from cutting production.
Ford has adjusted production schedules at five of its North American plants, including the Dearborn Truck Plant in Michigan, the Kansas City Assembly, the Chicago Assembly, the Louisville Assembly, and the Oakville Assembly in Ontario, Canada. Many vehicles are assembled at these five plants, including the Ford Explorer, F-150 (in both Dearborn and Kansas City), Escape and Edge, as well as the Lincoln Corsair, Nautilus and Aviator.
The semiconductor shortage had a similar impact on Ford's Crosstown rival, General Motors. Production was adjusted at three plants, including the Fairfax Convention in Kansas City, the CAMI Convention in Ingersoll, Ontario, and the San Luis Potosí Convention in Mexico. These three plants are responsible for the Cadillac XT4, the Chevrolet Malibu and Equinox as well as the GMC Terrain. Two other plants, Ramos Arizpe Assembly in Mexico and Wentzville Assembly in Missouri, build partially assembled vehicles. As soon as the required microchips are available again, these vehicles are ready. These plants are responsible for the Chevrolet Colorado and Blazer, as well as full-size Chevy and GMC vans.
Traders don't feel short yet
With automakers prioritizing their high-inventory vehicles, the shortage has not yet been reflected in the selection of vehicles that reach dealer lots. That could change, however, and buyers may not be able to find the cars they want, Kristin Dziczek, vice president of research at the Center for Automotive Research, told Car and Driver in January.
In North America, Stellantis - now owner of FCA and Peugeot - has seen a number of plants adjust production, including Toluca Car Assembly in Mexico, Brampton Assembly in Ontario, Belvidere Assembly in Illinois, and Windsor Assembly in Ontario. These four plants are responsible for the Dodge Journey, Charger and Challenger, the Jeep Compass and Cherokee as well as the Chrysler 300, Pacifica and Voyager.
Photo credit: Marc Urbano - Car and Driver
At Toyota's Texas engine manufacturing facility in San Antonio, Texas, where Tacoma and Tundra are assembled, production has been halted due to the shortage. Toyota says the tundra is primarily affected. Volkswagen has adjusted production at its plant in Puebla, Mexico, where the Jetta, Taos and Tiguan are built. only the Jetta is affected.
Honda has made manufacturing adjustments nationwide, including two plants in Ohio, the East Liberty Auto Plant and the Marysville Auto Plant, as well as Honda Manufacturing in Alabama, Honda Manufacturing in Indiana, and Honda Manufacturing in Ontario. Cars that Bloomberg says will cease production include the Honda Accord, Civic, Insight and Odyssey, as well as the Acura RDX.
Subaru has adjusted production at its Subaru of Indiana Automotive facility where the Ascent, Legacy, Outback and Impreza are assembled. Production was also reduced at Nissan's vehicle assembly plant in Canton, Mississippi. Only the truck line in which Frontier and Titan are assembled have adjusted production.
Image credit: Subaru
The scale of the shutdowns is now visible, but its full effects may not be seen until the latter half of this year. IHS Markit expects the supply of microchips to meet demand from automakers by the third quarter of 2021. Before that, however, the research company assumes that one million fewer vehicles will be built in the first quarter of this year.
Overall, research firm AlixPartners assumes that the shortage will cost automakers $ 61 billion worldwide, according to Bloomberg. Ford expects earnings to drop by $ 1.5 billion to $ 2 billion, and General Motors expects earnings to decrease by $ 1 to 2.5 billion this year.
Volkswagen has threatened to claim damages from suppliers such as Continental and Bosch, reported the Automobilwoche for the costs caused by the lack of microchips. VW, along with other automakers, claims that the shortage of semiconductors flowing to assembly plants is due to the myopia of its Tier 1 suppliers.
What is certain is that the semiconductor shortage will weigh on an industry that has emerged from a challenging year - and very few will get away unscathed.
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