BEIJING — Volkswagen Group, the biggest foreign automaker in China, on Friday said the country’s overall auto production could be interrupted after the COVID-19 pandemic disrupted chip supplies globally for some electronic components.
The pandemic has hit vehicle and parts production globally, and production in China, the world’s biggest auto market, relies heavily on imported chips for electronic parts such as electronic control units and electronic stability programs.
“The chip supply for certain automotive electronic components has been affected due to uncertainties caused by the pandemic,” a Volkswagen representative told Reuters in an emailed statement.
“This has led to a potential interruption in automotive production, with the situation getting more critical as demand has risen due to the full speed recovery of the Chinese market,” according to the statement, which refers to China’s overall auto production and not specifically Volkswagen’s.
German auto supplier Continental said a rebound in Chinese demand following a global slump in sales caused by COVID-19 is leading to a shortage of semiconductors that may cause supply-chain bottlenecks until 2021.
“Although semiconductor manufacturers have already responded to the unexpected demand with capacity expansions, the required additional volumes will only be available in six to nine months,” Continental said of the supply of semiconductors.
“Therefore, the potential delivery bottlenecks may last into 2021.”
One senior industry official, who declined to be named, told Reuters that he expects the shortage of chips will continue to impact China’s car production for a while and several international and local car companies will face production interruptions in the short-term but at different levels.
China is expected to sell over 22 million vehicles in the first 11 months, down just 3 percent from the same period a year earlier.
Volkswagen also said it was closely monitoring the situation and had already started coordinating with suppliers to take appropriate countermeasures.
VW has local joint ventures with SAIC Motor Corp., China FAW Group Corp. and Anhui Jianghuai Automobile Group Corp .