Audi will delay the production of some of its high-end cars because of the “massive” shortage of computer chips that is sweeping across the automotive industry, its chief executive said.
The luxury car marque, part of the Volkswagen group, has put more than 10,000 workers on furlough because the chip shortage has slowed its production lines, said its head, Markus Duesmann, in an interview with the Financial Times.
Audi will “do everything we can to keep it below 10,000 [fewer models produced] for the first quarter,” said Mr Duesmann.
The Volkswagen brand itself has said it will make 100,000 fewer cars in the first quarter as a result of the shortage of chips, with Nissan, Honda, Daimler, Renault and General Motors also saying they are facing problems. Ford said it would close its plant in Saarlouis, Germany from Monday until February 19, according to the DPA news agency.
Mr Duesmann described the problems as “a crisis upon a crisis”. Demand for cars slumped for much of last year because of the coronavirus pandemic, prompting auto suppliers to cut their orders for the computer chips that manage everything from a car’s brakes and steering to its electric windows and distance sensors.
But demand for cars jumped unexpectedly in the final three months of 2020, as buyers became more optimistic. Audi had its best quarter ever, largely because of a rebound in China.
“We had a very strong fourth quarter, but in the months before it was not so clear how that would develop, and everybody was quite surprised by the strength of the market in the last few months,” Mr Duesmann said.
This caught out car parts suppliers, who were forced to compete with surging demand from the consumer electronics sector, as new gaming consoles and smartphones hit the market. Carmakers themselves, having switched to just-in-time manufacturing, no longer keep stockpiles of supplies themselves.
Some chip companies have now prioritised the car industry, but the long lead times in chip production mean auto suppliers will have to wait several weeks for their orders to be fulfilled, according to industry insiders.
“There is a very long [supply] chain with different supply levels,” added Mr Duesmann, saying it was smaller auto suppliers that had problems keeping up with the increased demand.
The former BMW executive, who took over at Audi last April, added that the chip shortage might “also affect the second quarter, but only in the order in which we build cars”.
But he said that as things stand, the VW-owned marque’s overall output for 2021 would not suffer as a result, as Audi would make up for lost time in the latter half of the year.