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According to the head of the company’s Seat brand, Volkswagen has warned top executives to prepare for greater production success in the second quarter than the first due to global chip shortages.
“Vendors and the Volkswagen Group are telling us that we have to face considerable challenges in the second quarter, probably more difficult than in the first quarter,” Wayne Griffiths, president of VW’s Spanish brand, told the Financial Times.
The warning raises the possibility of higher losses for the world’s second-largest vehicle maker, which said last year it expected production to drop by 100,000 vehicles in the first quarter of 2021 due to shortages of semiconductors.
VW has already warned that it does not have the factory capacity to recover lost production by the end of the year.
Griffiths said the shortage was the “biggest challenge” the company faces right now.
The weight of the crisis is being felt throughout the industry, and shortages are expected to reach production by the second half of the year.
Last week, Ford closed a dozen facilities in North America and Europe, some for months, while Jaguar Land Rover will close two of its UK factories this week.
Renault last week completely suspended production guidelines, saying there was too much uncertainty in its supply chain, while Daimler cut the hours of more than 18,000 employees in Germany to meet lower production levels.
Vehicle manufacturers have already lost the manufacture of hundreds of thousands of vehicles during the first months of this year, with most major manufacturers announcing production shutdowns that analysts expect will cost the industry billions of dollars in throughout the year.
The crisis, which began last year but was exacerbated by Texas storms and a fire at a Renesas chip factory in Japan, comes just as manufacturers were picking up demand after the pandemic.
Griffiths, who took over the role last October, said production at the Seat plant in Martorell, outside Barcelona, was currently “hand in hand”, and the brand decides which cars to build only after receiving tokens from suppliers.
“The name of the game this year will be flexibility,” he said. Once the company receives its chips, it can decide which models to build, alternating hybrid and traditional vehicles based on the components it receives.
“We must try to build when we succeed [chips] available, “he added.
Across the VW group, the company has announced shutdowns at several plants, including last week it partially halts production at its Slovakia plant that builds many of the company’s largest sports vehicles.
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