How the microchip shortage has roiled an industry


The chip shortage has tapped the brakes on Volvo Cars’ market momentum.

This year, Volvo had to temporarily halt production across its network, including factory lines in Sweden, Belgium, the U.S. and China, to cope with the supply disruption.

According to AutoForecast Solutions, Volvo has trimmed an estimated 22,000 vehicles from its schedule worldwide so far because of production stoppages.

That tally could rise to as much as 29,000 before the crisis is over, AFS noted.

Last month, Volvo halted production at its Swedish plant near Gothenburg where it builds the XC60 and XC90 crossovers and V90 sedan. In June, production at Volvo’s Belgian plant in Ghent was interrupted for a week. That plant builds the fast-selling XC40 and XC40 Recharge P8 crossovers.

Meanwhile, assembly of the S60 sedan at Volvo’s U.S. assembly plant near Charleston, S.C., has been sporadically disrupted since March as a result of supply interruptions and reduced demand for the sedan.

Volvo had reported the best global sales and operating profit in the company’s 94-year history for the first half of the year as demand for electrified vehicles grew.

But the automaker warned in July that the ongoing shortage of microchips would negatively impact its results in the second half.

“The base scenario that we have is that the chip shortage will not improve, which means our sales and revenue growth in the second half will be flat compared with the second half of 2020,” Volvo CFO Björn Annwall told Automotive News Europe.

Reported by Vince Bond Jr., Laurence Iliff, Urvaksh Karkaria, Hannah Lutz, Michael Martinez and Larry P. Vellequette

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