Production delays worsen due to chip shortage – VW

The Volkswagen Group has warned that production delays caused by the global semiconductor shortage could worsen in the second quarter of the year, the Financial Times reported. Seat president and Cupra CEO Wayne Griffiths said the chip shortage is the “biggest challenge” the company faces at the moment.

“We are being told from the suppliers and within the Volkswagen Group that we need to face considerable challenges in the second quarter, probably more challenging than the first quarter,” Griffiths added. Production at Seat’s Martorell plant outside Barcelona was currently “hand to mouth,” Griffiths told the paper, with the brand deciding what cars to build only after it receives chips from suppliers.

The situation doesn’t seem to be improving, and Volkswagen is expecting chip supply to remain tight for the foreseeable few months. VW CEO Herbert Diess said the company has been unable to build no less than 100,000 cars last month due to the shortage, and the company cannot provide visibility for the full year.

Diess also said the group will not be able to make up for the production shortfall in 2021. “The situation has been exacerbated by the blizzards that have occurred in Texas, as the large chip manufacturers based there had to stop or reduce their production. For that reason further adjustments to production cannot be ruled out,” VW said in an emailed statement last weekend.

The semiconductor shortage stems from a combination of factors, mostly caused by the onset of the Covid-19 pandemic. When car manufacturers temporarily ceased production in Q2 2020, they cancelled their chip orders. This allocation was then put towards the electronics industry, which has seen an unprecedented boom in demand from stay-at-homers who are buying new computers for work and play.

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