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Volkswagen has warned senior executives to achieve greater production success in the second quarter than before, due to a shortage of global chips, according to the head of the Seat company brand.
“Suppliers and the Volkswagen Group are telling us that we have to face big challenges in the second quarter, probably more difficult than the first quarter,” VW Spanish brand president Wayne Griffiths told the Financial Times.
The warning raises the possibility of the world’s second-largest automaker experiencing higher losses, as it said it expected 100,000 vehicles production to drop by 100,000 in the first quarter of 2021 due to a shortage of semiconductors.
VW has already warned that it does not have the factory capacity to recover production lost during the year.
Griffiths said the shortage is the “biggest challenge” the company faces at the moment.
The hardest toll of the crisis is being felt in the industry, and shortages are expected to pick up production until the second half of the year.
Ford has shut down a dozen facilities in North America and Europe last week for several months, and Jaguar Land Rover will close two plants in the UK this week.
Last week Renault completely abandoned the production policy, arguing that there was too much uncertainty in its supply chain, as Daimler reduced the hours of more than 18,000 workers in Germany to adapt to lower production levels.
Manufacturers have already lost hundreds of thousands of vehicles this month. Most large manufacturers have announced production shutdowns, which analysts say will cost the industry billions of dollars a year.
The crisis began last year, but was exacerbated by Texas storms and fires at Japan’s Renesas chip factory. It happened when manufacturers were reviving demand after the pandemic.
Griffiths took over the role last October, saying that production at the Martorell plant outside Seat Barcelona is “hand-to-mouth” today, with the brand deciding which car to build after suppliers receive the chips.
“The name of the game this year will be flexibility,” he said. Once the company has picked up its chips, it can decide which model to build, flipping it between hybrid and traditional cars based on the components it receives.
“We have to try to build when we get it [chips] available, ”he added.
Throughout the VW group, the company has announced shutdowns at several factories, including a partial shutdown of the Slovakia plant, which builds many of the company’s largest sports vehicles, last week.
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