Volkswagen Cuts Output at Biggest Plant as Chip Shortage Bites
(Bloomberg) -- Volkswagen AG plants are set for a bumpy restart after the traditional summer break as the car industry remains in the grip of a chip shortage that most recently engulfed holdout Toyota Motor Corp.
VW’s Wolfsburg plant, the world’s biggest employing some 60,000 people, will restart with only one shift next week Monday through Friday, Europe’s biggest automaker said. Audi, the group’s biggest profit contributor, will extend the summer break by one week at its two factories in Germany as semiconductor supply remains “volatile and tense.”
Carmakers’ recent warnings of rocky months ahead are proving prescient after Covid-19 outbreaks in Southeast Asia forced restrictions at chip-processing plants. VW last month flagged “really constrained” output during the third quarter, while BMW AG predicted ongoing uncertainty.
Toyota will suspend output at 14 plants across Japan for various lengths of time through next month, succumbing to supply issues it had been navigating better than other manufacturers thanks to stockpiles of chips and other key components. The impact will be most severe in September, with Toyota slashing its production plan by 40%.
While carmakers have been forced to dial back sales expectations, higher vehicle prices and a focus on major money makers have helped cushion the blow.
According to research by Susquehanna Financial Group, the amount of time it’s taking for chip-starved companies to get orders filled has stretched to more than 20 weeks, indicating the shortages are getting worse.
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