Due to lack of parts, assemblers paralyze the production of 280 thousand vehicles in the country | Economy

Automakers must reduce vehicle production
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Automakers must reduce vehicle production

With the semiconductor crisis, Brazil will stop producing this year between 240,000 and 280,000 vehicles, according to an estimate made by the Boston Consulting Group (BCG) and published by Anfavea on Wednesday. In the global automotive industry, the impact will be a production loss of between 7 million and 9 million units this year. In Brazil, the production of passenger cars registered the worst level for the month of August in 18 years due to the lack of parts. 119 thousand units were manufactured.

“The consultancy revised the projections and estimated that there will be a greater loss than previously estimated. The previous estimate indicated that between 5 million and 7 million vehicles would no longer be produced in the world. Now, this number is between 7 million and 9 million “, said Luiz Carlos Moraes, president of Anfavea.

Last month, 172,800 units were sold, the lowest number for an August in 16 years. In comparison with July, the drop in sales was 1.5%. Since the beginning of the year, the total sold has reached 1.42 million vehicles, 21.9% more than in the first eight months of 2020, a period in which sales were impacted by the pandemic.

With the pandemic, there was a mismatch between the production of semiconductors and the resumption of demand in the automotive industry. A good part of the production of chips was diverted to the games industry, computers, cell phones while the production lines of the assemblers were stopped. When there was the reopening, parts were missing.

In addition, other external events hampered chip production at factories in Japan, Taiwan, Malaysia and the United States. In Japan, a fire in a production unit halted production. In the US, a blizzard in Texas halted production. In Taiwan, water shortages at one of the main factories have halted manufacturing. And in Malaysia, the rise of Covid cases by the Delta variant has halted production.

“There was a perfect storm in the sector,” said Moraes, recalling other difficulties in the production of vehicles such as the increase in the price of steel, delays in ships carrying parts, lack of containers and increase in air freight.

BCG estimates that the semiconductor supply problem will only normalize in the second half of 2022.

In Brazil, another concern for the sector is high inflation. With the increase in interest rates promoted by the Central Bank to curb the rise in prices, the CDC (Credit Direct to the Consumer) line of vehicle financing tends to rise. The average CDC rate is 22% per year and is estimated to rise to 26%

“When the Selic was at 6%, the CDC was 20%. Interest rates fell to 2% a year, but the CDC did not change. Now, when interest rates rise, the CDC is also high,” explained Moraes.