MW Automakers are bracing for a chip crisis that could roil production

By William Gavin

Carmakers are running low on critical semiconductors after a key supplier was banned from selling its chips due to geopolitical conflict

Honda Motor Co. has reportedly paused production in Celaya, Mexico, where it can make up to 200,000 vehicles each year.

The global automotive industry is getting ready for potential production cuts and factory shutdowns as it grapples with an ongoing shortage of critical semiconductor chips. At least one has already started pulling back.

Honda Motor Co., Ltd. (JP:7267) was the first company to begin reducing or suspending production across its plants in North America. That will continue into next week, according to a company spokesperson.

Production at a Canadian plant that assembles Civic sedans and CR-V SUVs has been slowed, according to a union that represents workers at a supplier to the plant. And the Yomiuri Shimbun, a Japanese newspaper, reports that Honda's plant in Mexico, which manufactures the HR-V SUV, has been temporarily closed.

The chip crisis plaguing the automotive industry began in September, when the Netherlands took control of Nexperia, a key automotive microchip maker owned by China's Wingtech Technology. In response, the Chinese Ministry of Commerce blocked exports of some Nexperia products. About 80% of Nexperia's total end-product capacity is in mainland China.

Nexperia accounts for about 5% of the global automotive silicon discrete market, according to S&P Global Mobility. It mainly sells standard parts that aren't technologically advanced but are widely used, with hundreds of chips often needed per vehicle.

"I think it's more than 2,000 small different chips," said Arno Antlitz, Volkswagen AG's (XE:VOW3) chief financial officer and chief operating officer, on a call with investors Thursday, according to a FactSet transcript. "And so it makes it also difficult to find alternative solutions because we are not talking about three or five or seven different units, more like thousands."

The European Automobile Manufacturers' Association, which represents companies such as Volkswagen and Mercedes-Benz Group (XE:MBG), said assembly-line shortages "might only be days away" as existing supplies dry up.

Volkswagen has enough supply to last at least through next week, according to Antlitz. While Mercedes is "covered" in the short term, it's also "scurrying" around looking for new suppliers, according to its chief executive. A spokesperson for BMW Group (XE:BMW) said production has been unchanged at its facilities.

"Every day we are pushing actions and projects" back to avoid disruption to production, Stellantis NV (STLA) Chief Executive Antonio Filosa said on Thursday, adding that the Jeep maker has set up a "war room" to address potential shortages.

Jim Farley, whose Ford Motor Co. $(F)$ has increased purchases from other suppliers in recent weeks, has said that a "very quick breakthrough" is necessary to avoid losses for the entire industry. General Motors Co. $(GM)$ has said it is also working to avoid disruptions.

Nissan Motor Co., Ltd (JP:7201) on Thursday said it expects a $1.78 billion operating loss in its current fiscal year, partially due to supply chain-related risks. Still, the automaker has said it has enough chips to last until next week without adjusting production.

Meanwhile, the CEO of fellow Japanese automaker Toyota Motor Corp. (JP:7203) isn't very concerned.

"I do think there's some risk, but it's not like we're facing shortages tomorrow," CEO Koji Sato told reporters at the Japan Mobility Show in Tokyo on Wednesday, according to Reuters.

-William Gavin

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October 30, 2025 14:25 ET (18:25 GMT)

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