Volkswagen may cut production due to chip crisis, to follow Toyota

After Toyota, another global automobile giant Volkswagen too is considering cut in production further due to the chip crisis, reports Reuters. Toyota has already announced that it will cut production by 40% in September. Now, the German automaker too hinted that it may need to cut production further due to the semiconductor supply crunch.

The global auto industry has been facing a supply chain crisis since the beginning of the pandemic. At the end of 2020, the crisis was amplified as there was a severe shortage of semiconductors.

With the gradual reopening of economies, the shortage issues were being addressed slowly. However, the latest outbreak of the Covid-19 virus in various Asian countries have impacted both chip production and operations at commercial ports.

Volkswagen has said that it expects the supply of chips in the third quarter to be very volatile and tight. The second-largest automaker of the world right next to Toyota has also told that it can't rule out further changes to production. However, the Wolfsburg-based carmaker said it expects the situation would improve by the end of 2021 and aims to make up for production shortfalls in the second half as far as possible.

This is not the first time the global automakers cut their respective vehicle productions. Earlier this year, almost all the major auto manufacturers around the world had to announce production halts due to the semiconductor supply chain issue.

The semiconductor crisis started late last year. During the first wave of pandemics in 2020, demands for consumer technology products increased multifold around the world. This was as the companies were shifting to work from home, and there was a huge demand for laptops, mobile phones etc. When the auto industry was reopening its plants, the chip manufacturers were unable to cope up with the demand, which eventually led to a massive disruption in the supply chain.