NIKKEI Asia January 8, 2021 02:00 JST |Automobiles|”Honda cuts car production on massive chip shortage” “Japan output slashed by 4,000 units this month while February looks ‘grim’”
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Summary of Article
An auto-industry bottleneck caused by the pandemic has emerged “due to a supply crunch in semiconductors.” A cut of 4,000 units or 0.1% of global production will affect Honda’s production of “the Fit” made in Suzuka, Mie Prefecture. A source indicated that cuts could go deeper stating “’The period starting in February may be grim’”…impacting “tens of thousands of vehicles during the January-March quarter on the domestic side alone.” These chips are used in “vehicle control systems.” The shortage root cause relates to chip makers shifting production from automobiles to chips used for smartphones and computers as work shifted from office sites to home for many and consumers created a larger appetite for 5G and gaming applications. Demand for cars dropped early in 2020 but surged in Summer “especially in China” for electric vehicles and semi-conductor production could not then “keep pace.” Shifting production will take months. For Honda, responding to the rapid uptick in demand, has “kept Honda’s factories busy. In November, global production shot up 11.4% and in Japan 22.5%. In Germany, Volkswagen announced last month it will cut back on production in China, North America and Europe due to a shortage in chips.” Suppliers are concerned that production declines will spread reducing demand from their firms.