Auto Output Dives in Brazil, Mexico as Chip Shortages Bite

By Reuters
Reuters
Reuters
October 6, 2021 Updated: October 6, 2021

MEXICO CITY/SAO PAULO—Automotive production in Brazil and Mexico, Latin America’s two largest economies, plummeted in September, dragged down by an industry-wide semiconductor chip shortage and railroad blockades in Mexico, data showed on Wednesday.

Brazilian auto production was down 21.3 percent to 173,287 units in September from the same month in 2020, when the industry was scrambling to resume production from a coronavirus-induced shutdown, Brazilian automakers association Anfavea said.

In Mexico, auto output plunged 33.30 percent from September 2020 to 208,092 vehicles, while auto exports fell by 24.18 percent to 195,294 units, data from national statistics agency INEGI showed.

“All of this is due to the shortage of semiconductors, which at this point is affecting all levels of production for all participants in the domestic market,” said the head of the Mexican Automotive Industry Association (AMIA), Fausto Cuevas.

A semiconductor chip shortage is causing major auto production cuts around the globe and auto industry officials have warned the problem is getting worse.

In the latest fallout from the chip shortfall, Japanese automaker Nissan told Reuters it plans to carry out temporary stoppages at two Mexican plants for several days in October due to adjustments needed to manage the situation.

AMIA’s Cuevas forecast Mexican automotive exports would decline between 3.8 percent and 4.2 percent this year from 2020 and projected production to fall by between 4.7 percent and 5 percent, saying Mexico’s auto industry would only return to pre-pandemic levels in 2024.

A senior executive at Mexico’s Automobile Distributors Association (AMDA) said analysts were forecasting that supply and demand for semiconductor chips would be in balance around the second quarter of 2022.

Compounding carmakers’ woes in Mexico have been 86 days of railroad blockades as of Oct. 5 in the western state of Michoacan, home to the key port of Lazaro Cardenas, according to analysis by Grupo Financiero BASE.

Automakers in Brazil lowered projections for sales, output, and exports this year, blaming a shortage of parts and a slow economic recovery.

Anfavea, which represents global carmakers such as General Motors, Volkswagen, and Fiat in Brazil, now expects sales of new automobiles in Brazil to either fall by 1 percent or rise by no more than 3 percent this year. In July, the association had forecast 13 percent sales growth from 2020.

Vehicle sales in Brazil fell 10.2 percent in September from August to 155,075 units, according to Anfavea. Still, automotive output in Brazil did rise 5.6 percent in September from August.

By Alberto Alerigi Junior

Reuters