Chip Crisis Deepens at Stellantis
By Nick Kostov
Jeep-maker Stellantis NV slashed planned production by 11% in
the first three months of the year due to the global chip shortage
and warned of additional cuts in the weeks ahead as the crisis
A lack of semiconductors resulted in a cut to planned
first-quarter production of about 190,000 vehicles, the car maker
said. The problem will force it to cut second-quarter production
even more, but it expects the situation to improve after June.
Eight of the company's 44 plants were affected to some degree by
the shortage as of Tuesday. The company's finance chief, Richard
Palmer, said Stellantis expects the issue to continue into next
year, adding, "It would be naive to expect it to just
The warning came as growth in South America and Europe fueled a
14% rise in sales at Stellantis to EUR37 billion, equivalent to
about $44.5 billion, compared with the first three months of last
year, when lockdowns related to the coronavirus pandemic took their
toll on sales and factory output around the world.
Like its competitors, Stellantis has been scrambling to secure
semiconductors used in electronic-vehicle controls as global demand
for smartphones, laptops and other electronics surged during the
pandemic. In one factory in France, the company reverted to analog
speedometers to replace digital board instruments that require
Dealer stocks also fell world-wide, primarily due to the chip
shortage. "We're learning to operate with a lower level of dealer
stock," Mr. Palmer said.
The shortage has been exacerbated by chip manufacturing
disruption from severe weather in Texas and a fire at Japan's
Renesas Semiconductor Manufacturing Co. in March that halted
production. "It's been a sequence of events that have been creating
difficulties in this supply chain but I do think it's going to
improve in the second half," Mr. Palmer said.
The chip shortage is clouding what is an otherwise favorable
backdrop for Stellantis. Auto sales have gathered momentum in
recent months, fueled by federal stimulus and continued low
interest rates. Stellantis said it expects industry sales to grow
8% in North America this year and 10% in Europe.
Stellantis was formed by the combination of Fiat Chrysler and
Peugeot-maker PSA Group in January. Mr. Palmer, the finance chief,
told reporters that it would take a while to realize the full
potential of the merger, but that the integration was "very much on
The company has pledged to generate $6 billion in annual savings
-- achieving about 80% of that amount by the end of 2024.
Stellantis doesn't report a profit figure for the first
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
May 05, 2021 04:28 ET (08:28 GMT)
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