Chip Shortage Could See Renault Confirm More Production Cuts

The chip shortage continues to severely impact the car industry, after sources within Renault this week warned of larger production cuts than expected.

Three sources with the French car maker told Reuters that Renault expects to produce at least 300,000 fewer vehicles this year.

Renault in September declared that the chip shortage has caused it to produce 220,000 less vehicles, so 300,000 lost vehicles is even worse news than expected.

And one source warned the figure could be as high as 400,000.

Chip shortage

And such is the scale of the problem, that London-based data provider IHS Markit told Reuters that the chip shortages could cost the automotive industry around 11 million vehicles in lost production this year.

The pain for Renault and other car makers has been ongoing for a while now, and matters are not helped by the difficulties the global supply chain is currently experiencing, creates shortages of items in practically every country in the world.

In April this year it was revealed that Renault was seeking to extend furlough for 9,000 staff, and had begun negotiations with trade unions to extend the partial idling of three of its four factories in Spain until the end of September.

What made that September extension significant was that Renault had already partly idled its Spanish plants because of the chip shortage, but the car maker had been expecting chip supply to return to normal in the second half of the year, and this has not materialised by a long shot.

Car industry pain

But Renault is not alone.

In August Toyota announced that worldwide vehicle production would be slashed by 40 percent in September because of the global chip shortage.

In September car maker Opel, part of the Stellantis Group, which also includes the brands such as Citroën, Fiat, Peugeot and Vauxhall, announced that it would close one of its plants in Germany, until at least the end of the year, due to chip shortages.

Opel said at the time that some 1,300 workers employed at the plant would be temporarily laid off.

That came after the UK’s Vauxhall confirmed that hundreds of jobs were at risk at its van plant of Luton, the traditional home of the brand, due to a global shortage of microchips.