A chip shortage may cause production disruption for world's largest car maker

Chipmakers busy supplying to consumer electronics and other sectors may have not anticipated the quick rebound made by auto sector.Volkswagen will need to adjust first-quarter manufacturing plans around the globe because of the bottleneck.
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| Updated on: 19 Dec 2020, 10:17 AM
File photo of Volkswagen cars used for representational purpose. (Bloomberg)
File photo of Volkswagen cars used for representational purpose. (Bloomberg)

Volkswagen AG is bracing for a major production disruption from a shortage of semiconductors.

The world’s largest automaker will need to adjust first-quarter manufacturing plans around the globe because of the bottleneck, VW said in a statement Friday, without giving specific figures. Chipmakers focused on supplying to consumer electronics and other sectors as the pandemic unfolded and have been caught off-guard by the relatively quick rebound in vehicle production, according to the company.

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(Also read: More trouble for Volkswagen in diesel scandal, loses case in top EU court)

The supply-chain issue could keep VW from getting off to a smooth start next year after the coronavirus undercut manufacturing operations during much of 2020. The world’s best-selling automaker has navigated fallout from Covid-19 relatively well so far, helped by demand snapping back in China, its largest market.

VW cautioned last month that 2021 is shaping up to be a “transition year" and that it might take until 2022 before it returns to pre-crisis financial planning. While industry sales in China have expanded five straight months, another wave of infections hitting Europe has led to lockdowns across the continent, including in VW’s home market of Germany.

First Published Date: 19 Dec 2020, 09:04 AM IST
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