Auto chip shortage weighs on German economy


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German automakers will continue to suffer from a severe semiconductor shortage in the “medium term,” the industry lobby group warned, slashing its production forecast for this year by 400,000.

The VDA’s comments came as a fifth consecutive monthly drop in vehicle production in Europe’s largest economy led to lower output at German factories in May.

At the same time, overall industrial production fell 0.3% from the previous month, largely due to supply issues with crucial materials such as steel, copper, wood and plastics, leaving it 5% below its level before the pandemic of February 2020, the Federal Statistical Office said on Wednesday.

Economists were expecting slight growth of 0.5%, according to a Reuters poll.

The biggest drag on German industrial production was the 3.4 percent drop in the production of capital goods. This is mainly due to a 7.2% drop in vehicle production, which has declined each month this year and was 28% below its pre-pandemic level in May.

“The slight decline in German industrial production in May, which left it well below its pre-pandemic level, was due to a further decline in vehicle production,” said Andrew Kenningham, economist at Capital. Economics, adding that the situation was “likely to be resolved only gradually”.

The VDA this week lowered its forecast for domestic production growth in 2021 by 10 percentage points and said it expected only 3.6 million, instead of 4 million, passenger cars to be built. by German brands by the end of December. In 2019, the last year before the pandemic, German companies built 4.6 million cars.

Hildegard Müller, who heads the VDA, said the semiconductor shortage was not a “self-imposed problem” caused by poor planning, but that there had been an “exponential” increase in demand in the industry. many areas. She added that “in the short to medium term it will be difficult to find solutions,” but urged politicians to support the construction of new chip manufacturing facilities in Europe.

Manuel Kallweit, the VDA’s chief statistician, said part of the problem was high local demand for certain models. “In Germany we have a special situation where there is a high demand for electric cars and premium cars and both categories require more semiconductors than the average vehicle,” he said.

German automaker BMW, which has generally outperformed rivals in buying crucial chips, said on Wednesday that sales in the first six months of the year were up almost 40% from 2020 and more than 7% compared to the previous year. year of crisis 2019.

The company also surpassed its big rival Daimler in terms of sales, selling nearly 1.18 million BMW-branded vehicles during the period, compared to Daimler’s 1.16 million Mercedes-branded cars.

However, BMW warned that it expects “the semiconductor component supply situation to remain difficult” and that it “cannot rule out the possibility that this will impact sales during the period. rest of the year “.

IHS Markit calculated last week that 1.4 million fewer vehicles were produced globally in the first three months of the year due to shortages, and estimated that capacity would only start to meet demand car manufacturers than in 2022.


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