Skoda Auto sees more pain from chip shortage in blow to Czech economy By Reuters

© Reuters. FILE PHOTO: The brand of Skoda carmaker is seen on the entrance of a showroom in Good, France, April 8, 2019. REUTERS/Eric Gaillard/File Picture

PRAGUE (Reuters) -Skoda Auto, a Volkswagen (DE:) unit and the Czech Republic’s greatest exporter, will “considerably cut back and even halt” manufacturing from Oct. 18 till the top of the yr because of the international scarcity of chips hobbling the automotive sector.

Carmakers around the globe are combating an absence of semiconductor chips amid a post-pandemic rise in demand, and the disruption is hampering the Czech economic system and others in central Europe reliant on the auto business.

“Not even Skoda Auto is ready to keep away from this international disaster,” Skoda Auto spokesman Tomas Kotera stated.

The anticipated manufacturing curbs are the largest thus far in central Europe, and economists stated they’d result in a reduce in Czech progress forecasts.

Skoda, the spine of the nation’s automobile sector that employs 180,000 employees and makes up quarter of business output, has already stocked up tens of hundreds of automobiles completed however awaiting chips. Dealerships are reporting months-long waits for brand spanking new automobiles.

Kotera stated the agency wished to give attention to getting the backlog of just about completed automobiles to prospects as quickly as doable.

On account of Skoda’s outage, total automobile manufacturing ought to be related this yr to the 1.15 million automobiles made within the “covid” yr 2020, the Czech Automotive Business Affiliation stated.

Beforehand, the affiliation anticipated 1.3 million automobiles to be produced this yr.

Skoda, which employs 35,000 and stated it remained dedicated to sustaining jobs, predicted a gradual calming of the state of affairs for chips within the second half of 2022.

The uncertainty within the automobile business is turning into a significant drag round central Europe, forcing economies to rely extra on a rebound in providers or family spending to drive progress.

Information on Thursday confirmed Czech industrial output fell in August year-on-year for the primary time since February amid a pointy drop in automobile manufacturing resulting from prolonged holidays.

Hungary, the place carmakers likes Mercedes and Suzuki have needed to restrict some manufacturing, additionally noticed output progress shrink greater than anticipated due to the automobile sector. Output in Germany, the area’s key commerce associate, slumped in August.

The Czech Republic is house to 3 automobile producers. In addition to Skoda, which additionally halted manufacturing on the finish of September, Toyota has confronted outages, together with final month.

“Automotive will not be getting out of the trenches simply but, and which means dangerous information for the entire industrial sector, and that really means dangerous information for GDP (gross home product),” Raiffeisen analyst Vit Hradil stated, including he would look to revise his forecast for roughly 3% financial progress this yr.

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