How Car Makers Collided With a Global Chip Shortage

Executives at auto makers like Volkswagen AG and General Motors Co. were upbeat about the industry’s recovery in early fall. Demand was rebounding from pandemic lows, and their factories were humming again.

Then came the warnings. Like the one in a Nov. 12 Skype call between VW’s logistics head and officials at car-parts supplier Continental AG . The supplier said it wouldn’t deliver a range of core components VW needed because of a global semiconductor shortage, said people familiar with the call.

Other car makers were getting similar alerts from suppliers.

In December, the parts flow from Continental, Robert Bosch GmbH and other suppliers had so dried up that VW announced it would stop production of bestselling brands such as Audi and its namesake VW brand at plants in Europe, China and North America. Audi, citing a chip shortage, furloughed 10,000 factory workers for the first time since the spring lockdowns. Ford Motor Co. , Honda Motor Co. and others soon reduced output of vehicles from big pickups to compact sedans.

Continental began informing customers in the fourth quarter about supply-chain issues, a company spokesman said, declining to comment on specific customers calls. Bosch declined to comment on exchanges with suppliers. VW, GM, Ford and Honda said they are closely monitoring the situation and working to limit the impact.

Katherine E. Ackerman

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