How Ford, Audi, Daimler are cutting German production due to chip shortage

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Ford Motor Co., Daimler and Audi are among automakers joining Volkswagen in reducing production at factories in Germany due to a global shortage of microchips.

Ford will idle its plant in Saarlouis for a month because of semiconductor shortages. The factory builds the Ford Focus compact car.

Ford said Focus production will be suspended at the plant from Jan. 18 to Feb. 19. “When we restart production, our priority will be to build vehicles that have already been ordered by customers,” the company said in an emailed statement.

Audi will place workers at its factories in Ingolstadt and Neckarsulm on short-time working starting next week until Jan. 29. Production of the A4 and A5 models will be affected. The reason is “a massively restricted supply of semiconductors,” Audi said.

The production stoppage will not impact production of the Q2 and A3 in Ingolstadt. Production lines for the A6, A7, A8, R8 and Audi e-tron GT in Neckarsulm are also not affected, Audi said.

Audi is also reducing shifts temporarily at its plant in San Jose Chiapa, Mexico, because of the lack of availability of automotive semiconductors.

The Audi plant in San Jose Chiapa in Puebla state will operate with one shift, from Monday to Friday, from Jan. 18 to 29, and will operate with two shifts, from Wednesday to Friday, from Feb. 1 to 12, the company said.
 
Daimler is cutting Mercedes production because of supply problems but says it will prioritize production of its electric cars and high-margin vehicles such as the S-Class.

The company will reduce production at its compact-car plants in Rastatt and Bremen, Germany, and in Kecskemet, Hungary.

Last week Volkswagen brand said it would cut production of the Tiguan, Touran, and Seat Tarraco models at its Wolfsburg plant. The automaker’s northern German factory of Emden, which builds the Passat, will also be affected by short-time working for two weeks starting on Monday.

BMW said it has so far not been affected by the microchip shortages.

Suppliers have also been hit by supply bottlenecks. Robert Bosch and Continental said the supply to automakers of parts that use semiconductors has been affected.

“We are in close, daily exchange with customers and our suppliers on this and are working to improve the supply situation,” Bosch said.

German lighting and electronics specialist Hella said it has had to halt some production lines.

Microchip manufacturers say automakers are partly responsible for the bottlenecks.

“Some customers have ordered too late, which is why we are not keeping up with deliveries in some areas,” Dutch manufacturer NXP said. “It takes three months or more from the production of complex microchips to delivery,” a NXP spokesman said.

Automakers cut back microchip orders when factories were closed, and demand plunged during the first coronavirus lockdowns last year.

The industry is showing signs of recovery, but automakers and suppliers are competing with smartphone makers such as Apple and Samsung, which are raising their orders for microchips.

Supply for the auto sector in the near term is “very difficult,” in part because the semiconductor industry’s lengthy manufacturing process means clients are penalized for wrongly anticipating demand, said Mike Hogan, head of automotive business for Globalfoundries.

Globalfoundries is running its factories at an unprecedented pace and is prioritizing chips for cars to satisfy demand, Hogan said.

Nick Gibbs, Reuters and Bloomberg contributed to this report

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Saurabh Shukla

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