Stellantis extends production freeze at Jeep factory due to semiconductor shortage

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Dutch automotive giant Stellantis recently announced it would extend the production suspension it ordered at its Melfi, Italy Jeep plant through next Tuesday. The firm decided to temporarily freeze vehicle assembly at the factory due to the global semiconductor shortage last week.

Earlier this month, French automobile manufacturer Renault halted work at three locations because of the supply bottleneck.

The worldwide chip shortfall, which began in late 2020, has disrupted the operations of Ford, General Motors, and other top carmakers.

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Stellantis Extends Jeep Plant Manufacturing Freeze

Stellantis stated it would reduce production at its Melfi plant in early February as it lacked crucial electronic components. The conglomerate moved 7,174 employees to a temporary Italian government-funded furlough plan. The corporation utilizes the facility to manufacture its Jeep Compass and Renegade SUVs and the Fiat 500X crossover.

Around the same time, it also ordered a two-day shutdown of its Turin Fiat vehicle assembly complex.

The automaker subsequently paused work at its Eisenach, Germany, and Zaragosa, Spain sites because of the semiconductor crunch. As a result, its global output of Citroën and Opel cars has been diminished.

Late last week, Stellantis learned that one of its partners would not make a scheduled delivery since it did not have sufficient materials to complete the order. In response, it extended the manufacturing freeze at the Melfi site until February 23. The conglomerate asked the Italian government to provide “flexible furlough” support through March, which would enable it to resume production when more chip inventory becomes available.

Renault Impacted by Chip Shortage

Renault recently joined Stellantis in reducing its vehicle output because of the chip shortage. On February 4, the corporation suspended production at a French factory and two other sites in Morocco and Romania. It stated the temporary work stoppage would last a few days, but it declined to offer specifics.

The month prior, Renault’s Slovenian subsidiary Revoz announced it would freeze its vehicle assembly work. The company temporarily closed up shop due to the semiconductor bottleneck disrupting its supply of electronic components. Before the suspension, the Central European country’s sole auto manufacturer made 700 cars a day.

Many Leading Automakers Reducing Output

Several other leading carmakers faced considerable disruptions and major losses due to the global component bottleneck.

Ford eliminated shifts dedicated to making F-150 pickup trucks at its Michigan and Missouri plants because of the crisis. The firm’s flagship offering had been its best seller for almost 50 years. The corporation estimates chip shortfall-related output reductions will cut $1.5 billion to $2.5 billion from its yearly income.

Similarly, General Motors anticipates the crisis will cost it between $1.5 billion to $2 billion in annual revenue. Honda and Nissan stated the lack of available components would reduce their combined output by 250,000 vehicles through March. IHS Markit, a research group, anticipates the shortage will cause a 700,000 unit drop-off in personal transport production this quarter.

Consulting firm Alix Partners predicts the semiconductor scarcity will cost the global auto industry $60.6 billion in 2021.

As the shortfall continues affecting more and more carmakers, that projection will need to be revised upward. However, chipmakers and auto companies expect the bottleneck will be resolved by midyear. Since new vehicle demand remains strong, the sector may recover much of its losses before year’s end.

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