IHS Markit analysis and commentary: Impact of semiconductor shortages on global medium and heavy commercial vehicle production

The global semiconductor shortages are having a significant impact on the automotive industries. It took a while to reach the Medium and Heavy Commercial Vehicle (MHCV) sector, but the impacts are now visible. The influence on production will be uneven across OEMs and countries, with some seemingly unaffected. Several MHCV OEMs will face constraints in the second quarter. Combined with other supply-side challenges, these losses may net out as much as 3% of first-half 2021 production in some regions, including Europe and North America.

While IHS Markit believes the lingering effects of the chip shortage may cast a shadow as late as 2022, we expect that some of these first-half losses may be compensated for in the second half of the year.

Europe

In the first quarter, Volvo was the main affected OEM and closed its plant in Ghent, Belgium, for one week leading to a reduction of approximately 550 units. In the same period, employees of DAF and Scania in the Netherlands went on strike for three days leading to a reduction of approximately 1,050 units for both together.

In the second quarter, multiple OEMs announced constraints and stoppages amounting to reductions of 4,500–8,000 vehicles. This includes stoppages of two to four weeks at the plants of Volvo and Renault Trucks. Several other OEMs are reducing their line rates and planning stoppage days.

There are also some OEMs that are faring better: Iveco increased its line rate in February and run extra Saturday shifts in February and March and expects to increase its line rate further by June. Although MAN is faced by the constraints, production in the Polish plant increased. KamAZ announced its first-quarter production figure at 9,800 units that is 400 units higher than the company planned earlier. Furthermore, they will increase their line rates in May and even further in July.

Asia

By and large, India, China and South Korea are not affected in the MHCV sector by the chip shortage. Within the region, it's again the Volvo Group that is affected. Volvo's UD Trucks brand sees lower output at plants in Japan (reduction of approximately 330 units) and Thailand. (At the beginning of April, Volvo completed the transaction of selling UD Trucks to Isuzu.)

Americas

In Brazil, production stops occurred at the end of March/beginning of April due to a rise in COVID-19 cases in the country and the semiconductor shortage at Volvo. Both reasons led to a combined loss of 3,100 to 3,400 units in the first half of 2021, which is expected to be made up for later in the year as agribusiness continues to strive and exports from Brazil are forecasted to recover.

In North America, there are several plant stoppages, reduced line rates and production of unfinished trucks due to chip shortage. Affected are Daimler (rolling downtime in two medium-duty plants), Volvo Group, PACCAR (-3,000 units in Q1, that should be recovered in H2). International did not comment on the topic and Ford's constraints seem to focus in the Light Vehicle sector.

Overall, the constraints are less than in the light vehicles business. According to our semiconductor experts, the shortage was made worse by special events in March (cold wave in Texas and fire at the Renesas plant, in Japan) and will continue throughout the 4th quarter of 2021 in the light vehicle sector. For medium and heavy Commercial Vehicles, we assume that the OEMs have the potential to recover part of the lost volume in the second half of 2021.