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Renault Will Have A Bigger Production Cut Due To Chip Shortage: Reports

Renault Will Have A Bigger Production Cut Due To Chip Shortage: Reports
Carmakers around the world are troubled with the shortage of semiconductor chips and many have already downgraded their targeted production for the current year.
The latest to join the list is the French carmaker Renault.
The global scarcity of semiconductor chips has forced the French carmaker to cut down its planned production by at least 300,000 vehicles this year, according to reports quoting information from sources close to the company. According to analysts, this cutting down of production target is a far higher damage top eh company’s plans than was previously projected by it.
With the global scarcity of semiconductor chips for vehicles, which are used in everything from brake sensors to power steering to entertainment systems, automakers all over the world has been forced to reduce or even stop manufacturing vehicles. That has driven up the prices of vehicles because of a mismatch between supply and demand.
Analysts also expect Renault to sell more than a third more than the 220,000 vehicles it predicted in early September during the third quarter because of the chip shortage.
No comment from Renault was available.
The share price of the company listed in Paris dropped by about 4 per cent after the reports were published while the stocks of Renault’s European competitors including Volkswagen, BMW, and Stellantis, dropped by between 1 per cent and 4 per cent. All of these companies were forced to cut down production because of the chip shortage.
"The forecasts change all the time, but the shortfall will be between 300,000 and 400,00 vehicles," said one of the sources. That would represent at least 8% of the 3.75 million vehicles Renault sold in pre-pandemic 2019.
"This would imply that they would improve the situation significantly in the fourth quarter, which seems to me very, very ambitious," he said.
Chip shortages could cost the car sector roughly 11 million vehicles in delayed production this year, predicts the London-based intelligence company IHS Markit. The timing of the global chip shortage has come at a very bad time for the global auto industry, according to the automotive lobby group PFA, since auto companies are recuperating from the impact of the coronavirus pandemic hit and when most of the global companies are transitioning to all-electric vehicles.
The group estimates that the shortage of chips could carry on well into next year.  
As a response to the chip shortage, customers who supply chips to auto and electronics makers desire to strike deals that have a lock-in period for the longer term and customers are also willing to spend more, said reports quoting some electronics firms in Malaysia.
Renault has said that electric vehicles would account for up to 90% of its Renault brand sales by 2030.
All cars manufactured in the European Union this year must comply with EU regulations that cap average CO2 emissions from new cars at 95g CO2/km, or face heavy fines.

Christopher J. Mitchell

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