Global car manufacturers prepare for production reductions due to ongoing semiconductor shortages.

Carmakers globally are poised to reduce production in response to an export freeze impacting a key semiconductor manufacturer, signaling potential disruptions in the automotive supply chain. The situation arose when the Chinese semiconductor company Nexperia BV, a subsidiary of Wingtech Technology Co., was barred from exporting products from its facilities in China. This decision follows the Dutch government’s recent intervention, which took control of Nexperia citing concerns over strategic production.

In North America, Honda Motor Co. has initiated cuts and temporary suspensions in production across several factories. The company announced it would halve its output at its Canadian plant, which produces the popular Civic sedan and CR-V utility vehicles. Additionally, Honda’s Mexican assembly facility was temporarily closed earlier this week due to the ongoing chip shortage.

The European automotive sector is equally concerned, as the continent’s manufacturers may be forced to halt production imminently. The European Automobile Manufacturers Association issued a warning, stating that automakers in Europe are heavily relying on limited inventory to maintain operations. Notably, Mercedes-Benz Group AG confirmed it currently possesses sufficient supplies of Nexperia chips for short-term production needs, yet the situation remains fluid.

Volkswagen AG cautioned that maintaining an adequate supply of semiconductors is crucial for achieving its financial objectives for the year. While the company has secured enough components to sustain its German factories for at least a week, uncertainty looms regarding potential production disruptions thereafter.

Amid these challenges, Aumovio SE, a German auto-parts manufacturer spun off from Continental AG, is preparing for possible temporary work reductions due to the ongoing chip shortages.

In the United States, the Motor & Equipment Manufacturers Association has indicated that American vehicle manufacturers may face significant production impacts within weeks unless the dispute surrounding Nexperia is resolved. Nexperia is responsible for supplying critical semiconductors used in vehicle control systems, which facilitate various functions such as window operations and windshield wiper activation.

This trade dispute occurs alongside a broader conflict characterized by China imposing stricter export regulations on vital materials, including rare earth elements and battery components essential for electric vehicles. Recent diplomatic engagements between the leaders of China and the United States have sparked hopes of an agreement that could rejuvenate global supply chains.

Wingtech has criticized the Dutch government’s intervention, arguing that the move undermines Nexperia’s operational viability and could compromise its business in Europe. The company advocates for restoring full ownership and management rights, seeking to alleviate tensions and bolster economic security in the region.

Industry leaders including Ford Motor Co. and General Motors Co. have expressed concerns regarding the political ramifications of the Nexperia conflict. Despite the turmoil, Toyota Motor Corp., the largest automaker globally, reported limited production impacts thus far. Nonetheless, Chief Executive Officer Koji Sato acknowledged the potential risks associated with ongoing supply chain disruptions. Meanwhile, Nissan Motor Co. indicated it has sufficient inventory to continue operations through the beginning of November.

As the automotive industry navigates these challenges, the focus remains on finding solutions to sustain production amidst a complex landscape of geopolitical tensions and supply chain vulnerabilities.