This is not good news.
The global economy is in crisis mode. Ordinary people are struggling to maintain a decent standard of living, and businesses all across the globe are dealing with massive supply chain backlogs. The automotive industry is also suffering major production delays and the ongoing semiconductor shortage is a major contributing factor. We've been reporting on the semiconductor shortage for a while now and it seems like things aren't improving much. Some manufacturers claim to have the solutions, while others warn of even tougher times ahead. The American industry is looking to boost its own manufacturing capacity, but for now, the shortage continues to stall car production, and Volkswagen expects the shortage to run into 2024.
Volkswagen's finance chief Arno Antlitz believes that the semiconductor shortage will be in place for at least the next two years, after which the industry will experience a structural undersupply: "We see a structural undersupply in 2022, which is only likely to ease somewhat in the third or fourth quarter," said the executive in an interview with German newspaper Boersen-Zeitung. "The situation should improve in 2023, but the structural problem will not yet have been fully resolved." The shortage has forced Volkswagen to stop production at many of its major factories, including EV factories in Zwickau and Dresden, responsible for manufacturing the Volkswagen ID.4.
BMW Group CEO Oliver Zipse told the Neue Zuercher Zeitung newspaper that 2023 will be tough for most manufacturers. "We are still in the height of the chip shortage," said the BMW boss. "I expect us to start seeing improvements at the latest next year, but we will still have to deal with a fundamental shortage in 2023."
On top of the chip shortage, parts manufactured in Ukraine, such as wire harnesses, are also starting to become scarce due to the ongoing invasion by Russia. "We have set up a crisis team and, in some cases, also shifted volumes to other production facilities of the same suppliers," said Antlitz. "However, the alternative locations are not intended to replace the production sites in Ukraine in the long term. We stand by our existing supplier sites in Ukraine and provide support where we can." In such a globalized world, American manufacturers will also start to feel the aftershock of the war in Europe in months to come. Here's hoping a peaceful resolution is reached soon.