Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Honda will shut down its UK factory in Swindon for four day in the coming week as global chip shortage has plagued several automakers worldwide. Volkswagen and Daimler will also join the list of carmakers that have had to cut production amid shortages of semiconductors. 


These semiconductor are used to run cars and are essential to complete production. Reports said that during the pandemic at its height when lockdowns were observed worldwide, semiconductor producers switched production for auto with consumer electronics which were rising when people stayed home. 


German car manufacturer, Volkswagen (VW) and its subsidiary, Audi also announced that they would temporarily shut plants in Germany, reported local media. The companies have cut production days and have furlough workers as companies face chip shortages. Audi too has limited production and cut working hours until the end of January, reported media. 


Daimler is also planning to slash production at Bremen plant and reduce working hours, reported German media. Mercedes manufacturer also suggested that the plant maybe closed till the beginning of February for some days. Daimler announced on Tuesday that they were cutting working hours at their other German plant in Rastatt. 


Several other auto manufacturers including, Nisaan, Toyota, Fiat and Honda amongst other have been forced to cut production at this hour when sales were picking up. 


In the beginning of 2020, pandemic resulted in several shutdowns post which car makers ramped-up production to the max to make up for the lost time. This led to high consumption of semiconductors coupled with strong demand from consumer electronic sector. Another report suggested that consumer electronics sector is often ready to pay more for the required chips. The shortage of the chips is not easy to be tackled owing to high cost and complexities of expanding new facilities and plants. 

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