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The automotive industry is forced to delay production

26 January 2021

More than 10,000 workers are to be put on furlough, as Audi slows production due to a shortage of computer-chips, which manage everything from a car’s brakes and steering to its electric windows and distance sensors.

The company will make 10,000 fewer cars in the first quarter of 2021, due to the shortage which Audi is calling a “crisis upon a crisis” as the industry is still suffering at the hands of the pandemic. 

The shortage of computer chips is delaying production across the automotive industry, with Audi’s parent company Volkswagen and other rivals such as Nissan, Honda, Daimler, Renault and General Motors also being forced to slow production. 

Volkswagen is set to make 100,000 fewer cars this quarter, whilst Ford has closed its plant in Saarlouis, Germany from Monday (January 18 2021) until February 19.

Audi boss, Markus Duesmann, told the Financial Times that carmakers had been “caught by surprise”. 

After poor year of sales in 2020, due to reduced demand during the pandemic, demand for cars spiked in October, November and December 2020. Audi reported having its “best quarter ever”.

Having switched to just-in-time manufacturing, carmakers no longer keep stockpiles of supplies themselves and, with a surge in demand from the consumer electronics sector, are now having to wait several weeks for their computer chip orders to be fulfilled – despite the fact that some chip companies are prioritising the car industry.

Markus Deusmann said that the chip shortage could “also affect the second quarter, but only in the order in which we build cars”

However, he still believes that the overall output for 2021 should not suffer as a result, as Audi could make up for lost time in the second half of the year.

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