Renault expects semiconductor supply to remain 'difficult' until mid-2022

French automaker Renault expects the supply of semiconductor chips to remain ‘difficult’ until at least the mid of 2022, which is in turn affecting the automaker’s turnaround including overhauling its factory base. As a result, the carmaker is prioritizing the output of higher-margin cars and commercial vehicles as demand for such vehicles remains strong.

The carmaker has been forced in some cases to send someone to Asia to get chips for the vehicles, the company's CEO Luca de Meo said in an interview while he was the the company's Flins plant, where auto assembly is set to halt in a couple of years after operating for almost seven decades. “It’s a mess," said de Meo.

This facility, which is west of Paris, and makes Renault Zoe electric vehicle and Nissan Micra, will transform by 2024 to recycle and retrofit cars and batteries. The conversion of Flins factory is a key part of a broader overhaul of Renault including job and cost cuts and a lowering of global production capacity.

The production of the Zoe electric vehicle will continue until the overhaul takes place. The carmaker will consolidate EV output in France at a plant in Douai, where the electric Megane will be made. Renault is also making its no-frills Dacia Spring model in China.

As per a recently published report by Citi analysts, Renault has made “a solid progress on its turnaround plan". The carmaker has reduced leverage, accelerated cost reductions and recovery of profit margins, among other things to give a boost to its turnaround agenda.

In the interview, De Meo reiterated Renault’s projection that the company would make around 500,000 fewer vehicles this year, which is equivalent to nearly a fifth of last year’s output. He attributed this to a lack of components.