BMW is the latest automotive manufacturer to succumb to chip shortages. Global supply chain interruptions caused by COVID-19 and restrictive trade tariffs have wracked the auto industry and are predicted to cause tens of billions in losses. BMW is one of many major manufacturers to feel the effects.
Chip Shortages have slammed the auto industry for the last year
It would be easy to imagine that COVID-19 related supply chain interruptions caused this microchip shortage, but the truth is more frustrating. Trade Tariffs imposed against China by the Trump administration have directly impacted the global supply of computer chips.
Telecommunications company Huawei was cut off from chips made with American technology. Trump ordered that chips made with American technology could not be sold to Huawei Technologies. The company is a major smartphone manufacturer. It began stockpiling chips to get ahead of coming shortages in China. As other companies followed suit, stock dwindled quickly.
Semiconductor manufacturers were also affected by the tariffs meaning that fewer chips can be manufactured. Chinese computer chip companies were barred from the use of American tooling. This struck a crippling blow to the semiconductor industry and exacerbated global shortages.
Other brands felt the shortage before BMW
Many brands have been hit hard by these chip shortages, including U.S. brands GM and Ford. More than 20,000 Ford F-150s have been produced without these critical parts. Ford plans to install chips in these pickup trucks as supply increases.
Several Japanese automakers, including Nissan, Toyota, and Mitsubishi, have been subject to production shortages. Japanese pickup trucks have hit delays because of the shortage as well. The 2021 Toyota Tundra may not be released on schedule. Nissan will shut down its Kyushu plant for eight days in May. Another Nissan plant will pause production for ten days, and a third will cut its production hours, eliminating the night shift for fifteen days.
Industry experts predict that shortages could last into the rest of 2021. This massive-scale interruption to one of the largest industries on earth has already begun to affect global economies. It’s estimated that the auto industry will lose $60 billion to the chip shortage crisis. The effects of this loss will continue to be felt for years.
BMW puts the brakes on Mini production
BMW halted Mini production at its Oxford, England plant due to global computer chip shortages. The plant closure began on April 30th and spanned the first three days of May. Based on the plant’s production numbers in 2019, this could mean around 2,500 vehicles will not come off the production line. BMW’s other plants continued production as normal.
This is the first shutdown BMW has faced due to computer chip shortages. The brand paused production at its South Carolina plant, leaving 11,000 employees in limbo for more than two weeks. A lack of other components caused this production pause.