'Massive' computer chip shortage hits car sector already reeling from Covid and transition's end

Mon 18 Jan 2021
Posted by: William Barns-Graham
Trade News


A “massive” shortage of computer chips, which manage everything from electric windows to car brakes, is the latest crisis to hit the automotive industry.

Car manufacturers are already reeling from a year of declining orders due to the pandemic and disruption caused by new trade rules following the end of the transition period.

Bad timing

In what was a torrid year for the industry, production in 2020 fell to its lowest levels since World War II, according to Reuters.

The slump led auto suppliers to cut production of computer chips central to modern car design, but with demand rising again towards the end of 2020 following a surge of orders from China, firms now don’t have enough of them.

Markus Duesmann, head of Audi, told the FT that there was now a “massive” shortage of computer chips, affecting his firm’s ability to fulfil current orders.

The shortage could “also affect the second quarter, but only in the order in which we build cars,” he added.

Covid and Brexit impact

Other critical car parts are not reaching car factories in the UK due to delays at ports following the end of the transition period, the Times reports.

Jaguar Land Rover, Nissan, Honda and Vauxhall are being forced to cut production as the pandemic, parts shortages and port delays continue to impact.