The semiconductor chip crisis forces tough decisions.
The automotive industry is in full crisis mode. Car companies are struggling to navigate their way through a major semiconductor chip shortage, a crucial component required to complete final vehicle assembly. Without this chip that's roughly the size of a fingernail, new cars, trucks, and SUVs can't be shipped to dealerships for sale. Dealers are understandably worried about future inventory. Automakers have no choice but to prioritize what chip supplies they do have for their most profitable and important models.
It's a true sign of which vehicles matter most, even for luxury brands. Germany's Automobilwoche has confirmed the chip crisis has now struck the Mercedes-Benz E-Class.
Production for both sedan and wagon body styles has been halted at Daimler's plant in Sindelfingen, Germany since early last week but the assembly line is due to get back up and running again on May 14. It's not that Mercedes lacked chips as a whole, but wants to conserve what it has for three other models built there: the all-new EQS and the S-Class and S-Class Maybach.
The decision to temporarily sacrifice the E-Class for the company's new flagship electric vehicle makes total sense. Mercedes has a lot riding on the EQS and any production delays will have serious consequences. The decision to keep the S-Class and S-Class Maybach assembly lines running makes sense for another important reason: they're very profitable, probably more so than the E-Class.
Mercedes isn't struggling like General Motors, Ford, and Stellantis to keep production running at a relatively normal pace, but it's not completely immune. Nor is its longtime rival BMW whose CEO just went on record stating he's not overly concerned about the current situation, believing it'll resolve within a couple of years. It's still managing just fine and has only reported stoppages at two European plants for now.
Toyota is the only automaker with a sufficient semiconductor chip supply on hand. Harsh lessons were learned after the devastating earthquake struck Japan in 2011, and one of them was ensuring crucial components are to be kept stockpiled. Toyota bought and stored more chips than it needed for several years and that's paying off big time right now. As for Volkswagen, it's decided to take an entirely different approach to long-term chip supplies by designing its own.