Vehicle production stagnates in Brazil due to semiconductor shortage

RIO DE JANEIRO, BRAZIL – Brazil produced 192,800 vehicles in May, an increase of only 1% compared to April, a stagnation attributed to the global crisis in the supply of semiconductors, the sector’s employers’ association reported on Tuesday.

However, the increase in production is notably higher when compared to May 2020 (347.6%), when most of the factories were paralyzed due to the restrictive measures imposed in the first months of the pandemic.

According to the National Association of Automotive Vehicle Manufacturers (Anfavea), the production level has remained between 190,000 and 200,000 since the beginning of January, which reveals a sort of “technical ceiling” caused to the lack of material for the manufacturing of vehicles, trucks, and buses.

“That problem, which should extend until the first months of 2022, is responsible for the temporary stoppages of part of our factories, some for short periods, others longer,” highlighted the president of Anfavea, Carlos Moraes, quoted in a statement.

Moraes pointed out that the shortage of semiconductors affects several industrial sectors, but mainly the automotive sector since a single vehicle can have up to 600 semiconductors in its electronic systems.

Read also: Bosch inaugurates chip plant in Germany to supply Brazil

“The United States and countries in Europe caught the warning signal and are already developing industrial policies in the sense of producing these electronic components locally,” he added.

Between January and May, the country manufactured 981,500 vehicles, 55.6% more than in the first five months of 2020.

Despite the challenges in production, Brazil sold 188,700 vehicles in May, an increase of 7.7% compared to April and an increase of 203.4% compared to the fifth month of 2020.

In the year-to-date, sales jumped 31.9%, with a total of 891,700 units sold.

According to Anfavea, Brazil shipped 37,000 units abroad in May, increasing 9.1% compared to April and 855.4% compared to May 2020.

Between January and May, 166,600 vehicles were exported, 66.5% more than in the first five months of 2020.

Hope comes from Germany

Amid the greatest semiconductors shortage crisis, German giant Bosch advanced by six months the inauguration of a component plant in Germany that will supply other group units, including Brazil.

The inauguration ceremony, on Monday, June 7, was held online and attended by German Prime Minister Angela Merkel, thereby confirming the significance of local chip production, currently controlled by Asian countries, although Bosch is the world’s sixth-largest component manufacturer.

The event also included a virtual tour of the plant, which was granted €1 (US$1.2) billion in investments, partly financed by the local government and European Union financial institutions.

“It is the largest single investment made by Bosch in all of its 130-year history,” said Volkmar Denner, the group’s global CEO, who did not disclose the new plant’s production capacity.