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Carmakers fear more pain from microchip crunch

By EARLE GALE in London | China Daily Global | Updated: 2021-03-02 09:29

The company logo of auto parts maker Valeo is seen outisde a factory at Etaples, northern France, Dec 28, 2020. [Photo/Agencies]

A global shortage of microchips caused, in part, by a faster-than-expected economic recovery from the novel coronavirus pandemic could put the brakes on the auto industry during the first half of the year, the chief executive of one of the world's largest car-parts suppliers said.

Jacques Aschenbroich, CEO of Valeo, told the Financial Times that automakers expect several difficult months because demand for new vehicles looks to be far higher than previously expected, and this has created a strong demand for parts.

Aschenbroich said lockdowns aimed at restricting the spread of the virus that causes the COVID-19 disease have added to the problem by creating a strong demand for consumer electronics, and therefore an increased appetite for microchips that might otherwise be available to automakers.

"The second quarter is going to be difficult," he said. "There should be a recovery in the second half of the year. That's what the entire industry is thinking about."

Similar observation

His warning follows a similar observation made by Volkswagen, the world's second-largest carmaker by volume, which had said it expects to be able to produce around 100,000 fewer vehicles during the first part of this year because of logistical issues.

Renault has also expressed concern about shortages and said it too expects to build around 100,000 fewer cars this year.

IHS Markit, an Anglo-US information provider and analyst, said the shortage of microchips could result in delays in the production of around 1 million vehicles during the first few months of 2021 against a backdrop of global production having been around 84 million units last year.

Bloomberg news service said motor vehicle sales in Japan fell during February in what appears to be one of the first measurable signs of the global shortage of semiconductors having an impact.

The Japan Automobile Dealers Association reported on Monday the sales of cars, trucks, and buses dropped by 2.2 percent, in comparison to the level of a year earlier.

Economist Koya Miyamae, from SMBC Nikko Securities, said pent-up demand has led to a dramatic increase in potential orders, but manufacturers have not been able to keep up.

"It's a supply-side problem," he said, while insisting the second half of the year will be better.

The Telegraph newspaper said the shortages will likely continue until the summer.

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