Automobile

VW halts output at Passat plant in Germany until January

Due to the shortage of microchips and electronic components, production at Volkswagen’s plant in Emden, Germany, is on hold for the rest of the year.

The factory’s workforce was put on short-time work this week, according to a report in Automotive News Europe sister publication Automobilwoche.

The move is a week earlier than originally planned. The plant will resume output on Jan. 10 after the end of the Christmas vacation.

Emden builds the midsize Passat and Arteon models, and is due to start output of the VW ID4 full-electric SUV next year.

A VW spokeswoman told Automobilwoche that the short-time working would result in a total loss of about 70 working days in 2021. For the Emden site, this is a “massive cut” in production, she added.

The automaker did not provide exact figures for the drop in production. According to the works council, 70,000 fewer cars were produced in Emden this year. Instead of 190,000 planned, there were only around 120,000 vehicles, works council Chairman Manfred Wulff told the Nordwest-Zeitung and the Ostfriesen-Zeitung local newspapers.

The plant shutdown are the latest knock-on effect of a global shortage of semiconductors causing problems for vehicle output.

Production of the VW Golf and other compact models at VW’s home factory of Wolfsburg has been suspended many times this year, resulting in the plant having its lowest output since 1958.

Audi is also building fewer vehicles at its German plants as the semiconductor crisis continues to hamper the industry.

The shortage, due to supply problems and a surge in demand for electric consumer goods during the pandemic, has hit the auto industry hard, with millions of vehicles worldwide not being produced because important parts are missing.

No automaker has been spared and there is little relief in sight, with Renault seeing a “difficult” chip supply situation until at least mid-2022.

Volvo Cars struck a more optimistic note recently, noting that supply was still restrained, but production had “improved month by month” since September.

Automakers have been forced to get inventive as global chip crisis bites, with companies including Daimler and VW rethinking production strategies.

Ondrej Burkacky, a senior partner at consultancy McKinsey, told Reuters that automakers should consider direct investments in chip production, or longer supplier contracts with terms of more than 18 months.

“Not much of that has been implemented yet,” he added.

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