Automakers get creative to navigate chip shortage

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Stellantis is working on more standardization across its vehicle lineup rather than having to use specific chips for some models, CFO Richard Palmer said on a call with reporters last week.

“More standardization and flexibility — which is key when we have supply constraints,” he said. “We are managing scarcity.”

Automakers are also stocking incomplete cars, or “building shy” in industry parlance, to keep production lines humming.

In Hamtramck, Mich., near Detroit, an area stretching several blocks is filled with Ford F-150 pickups without some chips. General Motors said it is also storing unfinished vehicles while awaiting semiconductors.

Meanwhile, behind the scenes, suppliers are going to unusual lengths to try to secure chips. Stellantis partner JVIS-USA tried to sue NXP Semiconductors in a Michigan court in April in an attempt to get more chips, but a judge rejected its request.

Visteon flagged that automakers may seek compensation because of the shortages.

In Japan, Toyota President Akio Toyoda visited a Renesas plant that had suffered a fire to hasten its return to production.

But no relief is in sight, with even Apple, whose high-specification iPhones and aggressive demands typically place it at the front of the chip-customer line, saying it is starting to feel the pinch. Apple’s demand could leave automakers wanting even when chip manufacturers eventually manage to increase capacity.

“This has the potential to be a longer-term issue,” said Anna-Marie Baisden, an automotive analyst at Fitch Solutions. “This will only be exacerbated as vehicles become technologically advanced and use more chips.”

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