Honda has to cut production due to chip shortage

Many automakers are having to deal with chip shortages. We recently informed you that, for example, the American carmaker General Motors is struggling with this problem.

The problem is occurring even though the chip market situation is improving compared to last year. In 2021, a shortage of chips will force car companies around the world to cancel the production of over 11 million vehicles. In 2022, it should be under 4 million vehicles.

An illustration representing a computer circuit board and a car chip.

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Of course, this also significantly constrains carmakers and adds to the worries of manufacturers already struggling with a host of problems. One of these is felt mainly by carmakers in Europe, who are now worried about the problem of gas shortages and high energy prices.

Another problem is less demand for new cars due to the economic situation in individual countries. Consumers are weighed down by high inflation, high energy prices, and high food prices. High inflation, in turn, is forcing central banks to raise interest rates, making it more expensive than usual for consumers to finance new cars.

Second production cut this year for Honda

Japanese carmaker Honda will cut production by 40% at one of its plants and 30% at another in early October. This is the second 40% production cut for Honda this year.

Industry experts had hoped last year that the shortage would be resolved by this year, but persistent supply chain issues have delayed the industry’s recovery and affected the ability of automakers to return production to full volume.

Chip problems

Chip manufacturing is a big topic around the world. We recently reported that this industry is growing fastest in China.

The U.S. also wants to be a big player in chip manufacturing, so we recently saw the passage of the CHIPS law to help the domestic chip manufacturing industry and direct billions of dollars of investment into it. Of course, the outcome of this law will not be seen immediately, as it takes a long time to build chip factories.

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The current situation around Taiwan, where most of the global chip manufacturing capacity is concentrated, is also a risk. This situation is also worsening the relationship between the US and China. As a result, the US has restricted chip exports to China so that its powerful chips cannot be used in Chinese military systems.