The chip shortage crisis facing the car industry deepened on Thursday, with Renault warning of months of disruption and Jaguar Land Rover announcing temporary plant closures.
JLR’s decision to shut its Halewood and Castle Bromwich plants from Monday for at least a week, the first idling of its UK sites, comes hours after Ford extended shutdowns at five US plants, including one of its facilities that makes the flagship F-150 pick-up truck.
This week, Daimler cut the hours of 18,500 staff in Germany because of lower production.
Renault on Thursday warned that the situation will get worse, as winter storms in Texas and a fire in Japan last month are only just starting to have a serious knock-on effect on its production schedules.
The French carmaker has decided not to issue any production forecasts for the year as a result, with finance chief Clotilde Delbos saying on Thursday: “We don’t want to give any estimates that might be wrong very quickly.”
Renault’s overall sales fell 1.1 per cent to €10bn in the first quarter and it currently expects to lose production of “tens of thousands” of cars to the problems, Delbos said. It is now prioritising manufacturing of its most profitable models.
“Two months ago we said we think the peak will be in the second quarter, but we think there will be a lingering effect in the third quarter if not further,” Delbos said. “The visibility is deteriorating.”
Carmakers across the world have been hit by a global shortage of chips, which began last year when suppliers diverted supply to smartphones and laptops as demand for consumer electronics grew during the pandemic.
The car industry was later caught by surprise at the speed of recovering demand, particularly in China. It has also been hit by supply chain problems caused by severe cold weather in Texas in February and a fire at a Japanese plant owned by Renesas Electronics, one of the world’s biggest makers of chips for the car industry.
Truckmaker Volvo also warned on Thursday about the hit to its operations, which have had production stoppages because of parts shortages.
“The global supply chain for semiconductors as well as for other components remains very unstable and the uncertainty . . . is high,” said Volvo Group chief executive Martin Lundstedt.
Volvo’s shares rose 4 per cent after the group posted better-than expected profits and a doubling of new orders.
Renault’s first-quarter sales were hit by the chip shortage and currency fluctuations. Revenues fell 1.1 per cent to €10bn but the company said a policy of raising prices had offset some of the decline caused by the pandemic. The group is prioritising its most profitable vehicles in key markets outside Europe, such as the Kiger SUV in India and the Dacia Duster in Russia.
With the effect of currency fluctuations stripped out, sales rose 4.4 per cent, Renault added.
But it also warned of “headwinds” from foreign exchange and raw material costs and uncertainty from ongoing parts shortages.
Sales in the same period a year earlier — when its European plants were closed by lockdowns — fell to €10.1bn from €12.5bn in the first quarter of 2019.
Renault is in the middle of a €3bn turnround plan under chief executive Luca de Meo, following €8bn of losses during 2020.
The plan involves cutting factory capacity by a quarter and shedding 15,000 jobs, as well as overhauling its brands. Renault announced the sale of its 1.5 per cent stake in Daimler for roughly €1.2bn last month.
Source: Economy - ft.com
