Semiconductor Shortage Halting Car Production across North America

Semiconductor Shortage Halting Car Production across North America
semiconductor shortage halting car production across north america
carlos osorio via ap
  • across north america, automakers are being forced to adjust production schedules due to the scarcity of microchips.
  • general motors, ford, stellantis, toyota, volkswagen, honda, nissan, and subaru have all adjusted production at some of their north american plants to properly allocate the chips.
  • it is projected that globally, the shortage will cost the industry $61 billion, and through the first quarter of this year, one million fewer vehicles will be produced worldwide.

    the first signs of a semiconductor shortage appeared late last year, and now, a month and a half into 2021, the scope of the impacts is coming into view. plants across north america are seeing production schedules adjusted to properly allocate the limited number of microchips—which are made up of semiconductors—reaching automotive assembly plants. as the new york times noted recently, a new car or truck can have as many as 100 of the chips on board as essential components in everything from touchscreens to transmissions.

    general motors, ford, stellantis, toyota, volkswagen, honda, nissan, and subaru have all had to adjust production as a result of the scarcity of semiconductors. by and large, the automakers are prioritizing their high-margin vehicles, such as trucks and suvs, and cutting production of high-inventory vehicles—but nonetheless, that hasn’t prevented vehicles such as the ford f-150 from seeing production cut back.

    ford has adjusted production schedules at five of its north american plants, including at the michigan dearborn truck plant, kansas city assembly, chicago assembly, louisville assembly, and oakville assembly in ontario, canada. those five plants assemble many vehicles, including the ford explorer, f-150 (in both dearborn and kansas city), escape, and edge, as well as the lincoln corsair, nautilus, and aviator.

    at ford’s crosstown rival, general motors, the semiconductor shortage has had similar effects. production at three plants has been adjusted, including fairfax assembly in kansas city, cami assembly in ingersoll, ontario, and san luis potosí assembly in mexico. these three plants are responsible for the cadillac xt4, the chevrolet malibu and equinox, and the gmc terrain. two other plants, ramos arizpe assembly in mexico and wentzville assembly in missouri, are building partially assembled vehicles; once the needed microchips are again available, those vehicles will be finished. these plants are responsible for the chevrolet colorado and blazer as well as full-size chevy and gmc vans.

    dealers not feeling shortage—yet

    because automakers are prioritizing their high-inventory vehicles, the shortage hasn't yet been reflected in the selection of vehicles reaching dealer lots. nonetheless, this could change, and buyers could end up not being able to find the cars that they want, kristin dziczek, vp of research at the center for automotive research, told car and driver in january.

    in north america, stellantis—now the 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, and the chrysler 300, pacifica, and voyager.

    toyota's motor manufacturing texas plant in san antonio texas, where the tacoma and the tundra are assembled, has seen production disrupted as a result of the shortage. toyota says that the tundra is primarily affected. volkswagen has adjusted production at its puebla plant in mexico, where the jetta, taos, and tiguan are built; only the jetta has been affected.

    honda has seen production adjustments across the country, including two plants in ohio, the east liberty auto plant and marysville auto plant, and also honda manufacturing of alabama, honda manufacturing of indiana, and honda of canada manufacturing in ontario. the cars which will have production cut, according to bloomberg, include the honda accord, civic, insight, and odyssey, as well as the acura rdx.

    subaru has adjusted production at its subaru of indiana automotive plant where the ascent, legacy, outback, and impreza are assembled. nissan's canton vehicle assembly plant in mississippi has also seen production cut; only the truck line, where the frontier and titan are assembled, has had production adjusted.

    the scope of the shutdowns is now coming into view, but its full impacts may not be seen until the second half of this year. ihs markit projects that microchip supply will meet the demand of automakers by the third quarter of 2021. before then, however, the research firm projects that one million fewer vehicles will be built in the first quarter of this year.

    in total, research firm alixpartners projects that the shortage will cost automakers $61 billion globally, according to bloomberg. individually, ford projects that it'll cut into earnings by $1.5 billion to $2 billion, and general motors projects its earnings to be down by $1 billion to $2.5 billion this year.

    volkswagen has threatened to seek damages from suppliers including continental and bosch, automobilwoche has reported, for the costs incurred by the microchip shortage. vw, along with other automakers, asserts that the lack of semiconductors flowing to assembly plants is a result of the shortsightedness of its tier 1 suppliers.

    what is certain is that the semiconductor shortage will take a toll on an industry already coming out of a challenging year—and very few will escape unscathed.

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    source:caranddriver.com