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Renault has warned that the automotive industry is exacerbating the global shortage of chips

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Renault has warned that the car industry’s chip shortage is worsening and that winter storms in Texas and Japan over the past month have severely affected fires in its production schedules.

The French automaker has decided not to provide an annual production forecast, and chief financial officer Clotilde Delbos said on Thursday: “We don’t want to give a calculation that could be wrong very quickly.”

Renault’s overall sales fell 1.1 percent in the first quarter and Delbos expects to lose trouble producing “ten thousand” cars today. Now, manufacturing of the most cost-effective models is being prioritized.

“We said two months ago that we thought the peak would be in the second quarter, but we think it will have a lasting effect in the third quarter if we don’t move forward,” Delbos said.

Automakers around the world a global chip shortage, began last year when suppliers shifted supply to smartphones and laptops as demand for consumer electronics grew during the pandemic.

The auto industry was then surprised by the speed of demand recovery, especially in China. Also caused by supply chain problems caused by severe cold weather in Texas in February and a fire at a Japanese plant Electronic Renaissance, one of the largest chip manufacturers in the automotive world.

Manufacturers like Daimler and Ford have extended plant closures and part-time work to workers in recent days due to a shortage of chips and other parts.

The Volvo trucker also warned on Thursday of the success of its operations due to a shortage of parts and production shutdowns.

“The global supply chain for semiconductors and other components remains highly unstable and uncertainty… Is high,” said Martin Lundstedt, CEO of the Volvo Group.

Volvo’s shares rose 4 percent after the team made better-than-expected profits and doubled new orders.

Renault’s first-quarter sales were plagued by chip shortages and currency fluctuations. Revenue fell 1.1 percent to 10 billion euros, but the company said its policy of raising prices offset a decline caused by the pandemic. The group prioritizes its most profitable vehicles in major markets outside Europe, such as India’s Kiger SUV and Russia’s Dacia Duster.

Excluding the impact of currency fluctuations, sales rose 4.4 percent, Renault added.

But he also warned of the “headwinds” of foreign exchange and raw material costs and the uncertainty of the constant shortage of parts.

In the same period a year earlier (when European plants were closed due to closures) sales fell to 10.1 million euros in the first quarter of 2019 from 12.5 million euros.

Renault is at the center of a € 3 billion turnaround plan with CEO Luca de Meo after a € 8 billion loss in 2020.

The plan involves reducing the factory’s capacity by a quarter and dropping 15,000 jobs, as well as reviewing its brands. Renault announced a 1.5 per cent increase in Daimler’s sales of around € 1.2 billion last month.

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