Volkswagen: Chip shortage creating an ‘extremely volatile’ situation

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German politician Cem Ozdemir (left) gets a tour of a Volkswagen factory in Zwickau on June 3 from VW executive Stefan Loth (right). The shortage of important semiconductor chips needed for the proper functioning of cars shows no sign of abating, Volkswagen said on Tuesday. Photo: Hendrik Schmidt/dpa-Zentralbild/dpa

The shortage of important semiconductor chips needed for the proper functioning of cars shows no sign of abating, Volkswagen said on Tuesday.

The situation surrounding the tiny but critical chips remains “extremely volatile,” Volkswagen said, adding it was difficult to forecast how the supply chain issues would play out this year.

In the first-quarter, Volkswagen was unable to complete the planned production of about 100,000 vehicles.

According to a report by Business Insider, citing internal company documents, there are estimates that up to 800,000 fewer vehicles than previously anticipated could be built this year.

Volkswagen did not confirm this figure, saying it was still holding on to its overall plans for 2021.

“We expect the situation to ease in the second-quarter, and the Volkswagen conglomerate will do everything to catch up on the vehicles that were not built because of the chip shortage over the year,” the company said.

Due to last year’s temporary decline in car automakers’ demand for chips during the pandemic, chip manufacturers switched to producing components for telecommunications, entertainment technology or medical equipment instead.

The resulting supply-chain issues forced many carmakers to furlough their workers, including Volkswagen, Daimler and BMW in Germany.

Munich consultancy firm Alix Partners estimates that about 3.9 million vehicles worldwide might not be built because of the shortage.

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