Volkswagen and Renault count costs of supply crunch and chip shortage 

Carmakers around the world curtailing or suspending production

The supply crunch and chip shortages have shrunk Volkswagen's production levels to its lowest since 1958.

Volkswagen has produced just 300,000 cars at its main Wolfsburg plant so far this year, the lowest figure since 1958 and far behind its average output before the pandemic.

The plant, which makes cars from the Golf, Tiguan, and Seat brands among others, produced an average of 780,000 vehicles per year in the past decade and the company said in 2018 it aimed to boost this figure to 1m.

But supply chain problems meant just under 500,000 vehicles made it off the assembly line in 2020. 

This year's output, first reported by Die Zeit weekly, is set to be even lower as the chip crisis sets in.

Volkswagen has previously said it would have a production shortfall in the high hundreds of thousands due to a lack of semiconductors, a problem plaguing automakers worldwide which the company expects to last well into 2022.

A spokesperson said last week that discussions were under way to address the competitiveness of the Wolfsburg plant, which does not yet produce fully electric vehicles, particularly in the face of growing competition from new entrants such as Tesla.

The comments followed reports that Volkswagen CEO Herbert Diess had said at a supervisory board meeting in September that a delay in the transition to electric vehicles could cost the company 30,000 jobs — one in four of its current employees.

Meanwhile, French carmaker Renault expects to produce at least 300,000 fewer vehicles this year due to the global shortage of semiconductor chips, a much bigger hit than previously estimated.

The shortage of chips, used in everything from brake sensors to power steering to entertainment systems, has led carmakers around the world to curtail or even suspend production, pushing up the prices of vehicles.

The supply problems would cost Renault, which is set to publish its third-quarter sales on Friday, over a third more than the 220,000 lost vehicles it forecast in early September.

"The forecasts change all the time, but the shortfall will be between 300,000 and 400,00 vehicles," said a source. 

That would represent at least 8% of the 3.75m vehicles Renault sold in pre-pandemic 2019.

The chip crunch has come at the worst possible time, motor industry lobby group PFA said, as carmakers recover from coronavirus disruptions and shift towards producing all-electric vehicles.

It said that chip supply constraints could stretch well into 2022.