Volvo announced it would make a “substantial” reduction to its truck manufacturing operations in the second quarter because of the global semiconductor shortage. The Swedish corporation indicated it would idle select factories worldwide for 2 to 4 weeks depending on their location.
The automaker warned its other production lines might be affected by the supply bottleneck. General Motors, Ford, and Volkswagen have also initiated work stoppages at their facilities due to the parts shortage.
Volvo’s statement follows a recent fire at a foundry maintained by Renesas Electronics, one of its component suppliers.
Volvo’s Chip Shortage Related Production Problems
Volvo’s heavy vehicle production operations have suffered because of the global chip scarcity since last month. In mid-February, it temporarily suspended work at its Ghent, Belgium truck manufacturing center for a week due to insufficient part quantities.
The automaker’s plans to idle factories across its global network for longer periods of time indicate its problems have worsened.
Claes Eliasson, a company spokesperson, explained that Volvo’s European facilities would be hardest hit by the supply bottleneck. He mentioned that the firm would pause the assembly of new construction equipment as a consequence of the component crisis. The representative also noted the corporation’s sourcing issues began the result of COVID-19 disrupting the worldwide supply chain.
Unfortunately, Volvo’s efforts to fully revive its production difficulties will be exacerbated by the Renesas factory fire.
The supplier lost several 300nm wafer processing machines and sustained damage to its clean room in the blaze. The chipmaker is working on getting the site up and running again, but the complex could be shut down for up to a month. Renesas customers Toyota, Honda, and Nissan stated they needed to assess the fire’s impact on their respective supply chains.
Volvo’s sourcing headaches are unlikely to diminish in the near term with automobile chip quantities becoming even scarcer.
Other Automakers Idling Plants Amid Continuing Chip Shortage
Many of the Swedish car company’s contemporaries have idled their plants amid the ongoing semiconductor shortage this year.
Ford closed its Louisville, Kentucky assembly center for a week last month because of the part shortage. It paused work at its Oakville, Canada automobile factory for the same reason. The firm had reduced the number of shifts dedicated to manufacturing its best-selling F-150 truck due to the supply crunch.
General Motors extended the temporary suspension of three of its North American plants in response to the shortfall. GM expects the crisis to reduce its annual income by $1.5 billion to $2 billion.
The global electronic vehicle crunch has been equally disruptive to European and Asian auto vendors.
Stellantis, a Dutch conglomerate that owns Jeep, has reduced the output at its Italian and German complexes. Likewise, Renault, a French vehicle corporation, briefly halted work at its domestic, Spanish, Slovenian, Moroccan, and Romanian facilities. And Italy’s Fiat Chrysler Automobiles shuttered plants in Canada and Mexico on account of component insufficiencies.
In addition, German-based Volkswagen cited the semiconductor shortage as the reason it brought some of its factories in Europe, China, and North America offline.
Toyota, Nissan, and Honda, Japan’s leading carmakers, have cut back on their output in light of the chip crisis.
At present, the component sector executives and analysts expect the supply crunch to persist into 2022. That means even more vehicle plant shutdowns will be coming soon.