Renault sees 100,000-unit production risk due to chip shortage

PARIS – Renault hopes to limit production losses due to the semiconductor shortage to 100,000 units or less, CEO Luca de Meo said, but added that the situation remained fluid almost daily.

The shortage of chips, which are essential to run many systems on modern vehicles, has left global auto production in limbo. Almost all automakers have had to halt production at some point in the past three months.

Analysts estimate the global production deficit in the first half of the year could reach 1 million units or more, but expect chip supplies to recover in the second half of the year and most of the production losses to be recouped. The shortage has been linked to increased demand for consumer electronics, particularly due to coronavirus lockouts.

“Our visibility into the chip supply is quite limited,” Meo said Friday during Renault’s earnings call. “We’re getting as much information as possible on a daily basis. But at this point, we’re not in a position to make any solid assumptions month by month.”

He said he expected the shortage to peak in the second quarter, with a pickup in the third.

“For the whole year our best guess is that we have to work on a risk envelope of 100,000 vehicles, which we are trying to keep to a minimum,” he said. The group has already temporarily stopped production in factories in Morocco, Romania. and France.

Automakers, including Daimler and Toyota, also expect production to catch up in the second half of the year.

De Meo said Renault officials were working with suppliers to move parts to where they were needed most. “It’s an ongoing battle, probably until the end of the year, although we believe the supply shortage will ease in the second half of the year,” he said.

Renault CFO Clotilde Delbos said Renault had flexible contracts with employees that would potentially allow it to use the August break as a time to make up for any loss in production. “It is very important that we can use this ability to recover what we have lost in a few days here and there with the plant closures.”